Many more charities are now able to take advantage of their audit exemption.
Who qualifies for audit exemption?
With the income threshold for having to have an audit at £1 million. If you fall below this figure your charity is exempt.
To many charity Trustees this will certainly sound attractive, as there could well be a cost saving in only needing an Independent Examination of their accounts, rather than a full statutory audit.
However Trustees should consider the full implications of making such a choice, and not just be swayed by short-term cost savings.
What are the implications?
Firstly charities will need to make sure that their Constitution will permit them to dispense with an audit. If it doesn’t then it might be an opportunity to have a review of the Constitution. It could be that there will be other things that need bringing up to date.
Perhaps a more important consideration is the likely effect such a decision might have on grant making bodies, both existing ones and likely future ones. Even if the present grant making bodies would be happy enough without the accounts being audited (because of the charity’s proven track record for instance), the lack of an audit could prove to be a problem for those that the charity might apply to in the future.
Peace of mind
An audit is a source of reassurance for those Trustees who are not directly involved in the charity’s finance function. All Trustees are responsible for ensuring there is proper financial management. The recent high profile cases may cause Trustees to reflect on this and opt to stay with the higher level of comfort an audit provides the “sleep-at-night” factor.
The key message is not just to jump at the chance to “save a few bob”! There may be other things to take into account.
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