Getting ready for a charity audit takes more work than most trustees expect. Preparation isn’t just about handing over a file of year-end reports. It’s about pulling together the right records, resolving outstanding queries and making sure your books are clean before the process starts. The charitable organisations that prepare well get a smooth audit with fewer follow-up questions and genuine insight into their financial management. The ones that don’t can face weeks of delays, higher fees and uncomfortable conversations with the Charity Commission.
This guide covers what your finance team and trustees need to do in the months before fieldwork begins.
How do you prepare for an audit as a charity?
Start early – ideally three to six months before your financial year-end. Waiting until after the year closes means you’re working backwards, trying to fix problems that could have been prevented. Here’s a practical checklist:
- Reconcile all bank accounts – Every account should be reconciled to the penny as at the year-end date. Have year-end confirmations ready for every account the charity holds, including any closed during the year.
- Review fund codes – Restricted, unrestricted and designated funds must be clearly separated in your accounting software. Mixing restricted and unrestricted income is one of the most common findings.
- Clear the debtors and creditors lists – Old balances sitting in your ledger raise questions. Write off anything irrecoverable and chase outstanding invoices before year-end.
- Confirm grant income timing – Under Charities SORP (FRS 102), performance-related grants are recognised when conditions are met, not when cash arrives. Check that your income recognition matches the grant terms.
- Update the fixed asset register – Record any purchases or disposals with dates, costs and depreciation calculations.
- Prepare a draft trustees’ annual report – The narrative report needs to be consistent with the financial statements. Starting early gives you time to gather activity data.
What key documentation do charities need for an audit?
Your auditor will send a request list. Every firm’s is slightly different, but you should expect to provide:
- Year-end bank statements and reconciliations
- A trial balance from your accounting system
- Copies of all grant agreements active during the year
- Board meeting minutes covering the full financial year
- Payroll summaries and PAYE records
- Investment valuations and certificates
- Lease agreements, contracts and any new commitments
- Gift Aid claims and supporting records
- Related party transaction details (including trustee expenses)
- Prior year signed accounts and management letter
Organise these into clearly labelled folders before fieldwork begins. A surprising amount of time gets spent chasing missing documents, and that time gets billed.
When should you start preparing?
Six months before year-end: Review your internal controls. Are approval processes documented? Is there proper segregation of duties for payments? Fix gaps now.
Three months before year-end: Start reconciling accounts, tidying up the ledger and drafting the trustees’ annual report.
At year-end: Complete final reconciliations, run closing journals, and lock the period in your system.
Within two weeks of year-end: Send the document pack. Charities that deliver late often get bumped to a later slot, which can put your Charity Commission filing deadline at risk.
Common mistakes that delay audits
We’ve seen the same problems come up year after year. Avoiding these will save your charity time, stress and money.
Incomplete reconciliations. If a single bank account isn’t reconciled, nobody can sign off. And discovering a discrepancy mid-way through creates work for everyone.
Missing governance records. Trustees need to have approved key decisions – budgets, major expenditure, policy changes. Patchy minutes end up as a finding in the management letter.
Muddled fund accounting. Restricted fund income spent on general running costs is a regulatory problem, not just a bookkeeping one. Get this right throughout the year.
Ignoring the prior year management letter. Points were raised for a reason. If those issues aren’t addressed, they’ll appear again and may be escalated.
What are the UK requirements for a charity to be audited?
In brief: charities in England and Wales with gross income above £1 million must have a statutory audit under the Charities Act 2011. Below that threshold but above £250,000 with assets over £3.26 million, one is also required. We’ve covered the thresholds and the differences between audit and independent examination in detail on our dedicated service page.
But regardless of where your charity sits relative to the threshold, the preparation work is the same. A well-prepared charity makes the whole process quicker and less expensive for the charity and the auditor alike.
How to make the process smoother
Beyond the documentation checklist, a few things make a real difference to a smooth audit:
- Appoint a single point of contact. Someone who can answer questions quickly. If queries bounce between three people, progress stalls.
- Be honest about problem areas. If you know the financial records have gaps, raise the query upfront. Early disclosure builds trust and helps your organisation stay compliant.
- Book early. Charity year-ends cluster around 31 March and 31 December. Firms get busy. Booking your slot six months ahead means you get the dates you want.
How Audit Group can help
We work with charities of all sizes across the UK. As part of Jack Ross Chartered Accountants (ICAEW-registered, est. 1948), we bring decades of experience in the charity sector. We aim to keep the audit process as straightforward as possible. If you’d like to discuss preparing for your next audit, get in touch or call us on 0161 832 4451.
