Following a recent consultation process, the Cabinet Office has confirmed that it is proceeding with its plans to increase the charity audit income threshold in England and Wales. The consultation was held following a recommendation by Lord Hodgson in his review of the Charities Act 2006 that the audit threshold be increased.
The outcome of the consultation process is that the income threshold is being increased from £500,000 to £1million – meaning that any charity with income in excess of £1million will be subject to audit in accordance with the Charities Act 2011.
This new threshold of £1million will also be the threshold at which parent charities have to prepare consolidated accounts.
It is worth noting that the asset threshold for an audit remains unchanged – so for a charity with assets in excess of £3.26million and income in excess of £500,000, an audit will be required.
The thresholds for independent examinations have also been kept the same. However, it is interesting that several of the consultation responses expressed concerns at the rigour of the independent examination process and questioned the level of assurance that an independent examination provides. This is, perhaps, a discussion for the sector to have in the future – but the Government is to share the consultation feedback with the Charity Commission with a view to the guidance on independent examinations, and audits, being improved.
Subject to parliamentary approval, the new thresholds will take effect for accounting periods ending on or after 31 March 2015.
If you have any questions over the impact on these changes for your charity, then please do get in touch.
The information in this article was correct at the date it was first published.
However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.
If you would like to discuss how this applies to you, we would be delighted to talk to you. Please make contact with the author on the details shown below.
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