From the 1 April 2008 all charities (company and non-company) may opt for an independent examination instead of an audit. This follows a change in company law brought in by the Companies Act 2006 which extends the independent examination option to company charities for the first time. The new guidance on independent examination is now in two publications:
CC31- Independent Examination of Charity Accounts - Trustees' Guide sets out what an independent examination is and advises trustees on how to go about selecting their examiner.
CC32- Independent Examination of Charity Accounts - Examiners' Guide sets out what an independent examination is, who can undertake one, the Directions the examiner must follow and their whistle blowing responsibilities. It includes sample independent examination reports and advice for examining charities dual registered with the Office of the Scottish Charity Regulator.
Prior to financial years beginning 1 April 2008 only non company charities below the audit threshold could normally have their accounts examined by an independent examiner rather than an auditor. The Charity Commission has produced guidance for independent examiners and pro forma independent examiners reports. These are available from the following links:
CC63a - Independent Examination of Charity Accounts
This provides a commentary on the Charity Commission’s directions to independent examiners and gives details of how to calculate a charity’s gross income and total expenditure.
Pro forma Independent Examiner’s report
This is one of the forms in packs CC16 and CC17
Further advice on independent examination may be obtained from the Association of Charity Independent Examiners at www.acie.org.uk
Reporting Accountants – Audit Exemption Reports
Prior to financial years beginning 1 April 2008 certain smaller charitable companies were exempt from the requirements for an audit under the provision of the Companies Act 1985. For accounting periods commencing on or after 1 April 2008 company charities not required to be audited under the Companies Act fall within the audit and independent examination regime of the Charities Act 1993.
Practice Note 11 – Audit of Charities in the United Kingdom (PDF 630kb)
This Auditing Practices Board publication provides guidance on the application of auditing standards to charities and includes the APB Statement of Standards for Reporting Accountants Applicable to Small Charitable Companies.
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