A charity independent examination is a financial review conducted by an independent person to ensure that a charity’s accounts are accurate and comply with legal requirements. It is a simpler and more cost-effective alternative to a full audit, typically required for smaller charities that do not meet the audit threshold.
Who Needs an Independent Examination?
Charities in the UK must have an independent examination if their income is above £25,000 but below the audit threshold (currently £1 million or £250,000 if assets exceed £3.26 million). Charities with income under £25,000 do not require an independent examination but may still choose to have one for added credibility.
What Does an Independent Examiner Do?
The independent examiner reviews the charity’s accounting records and financial statements to check if they are consistent and free from obvious errors. They do not conduct the same level of detailed testing as an auditor but must ensure that the accounts give a true representation of the charity’s finances. If issues arise, the examiner may request clarifications or report concerns to the charity trustees or regulators.
Who Can Be an Independent Examiner?
An independent examiner must be someone with financial knowledge and experience, such as an accountant, but they do not need to be a qualified auditor unless the charity’s income exceeds £250,000. They must also be independent, meaning they cannot be closely involved with the charity, such as a trustee or staff member.
Why is an Independent Examination Important?
Independent examinations provide transparency and accountability, helping charities maintain public trust. They ensure compliance with legal requirements while being more affordable than an audit. By offering an external review of financial records, independent examinations support good governance and responsible financial management within charities.
For more information on Independent Examinations please contact info@millet.org.uk