Audit Group provides charity audit services for not-for-profit organisations across the UK. Our charity team has deep expertise in SORP, Charity Commission requirements and the practical challenges that boards face managing restricted funds and governance. We’re ICAEW-registered charity accountants in Manchester, working with local groups and national bodies alike.
The Charity Finance Group (CFG) audit survey consistently shows the charity sector wants more than a compliance exercise from their auditors. We agree. Our approach delivers real financial information that helps, not just a report for the filing cabinet.
When is a charity audit required?
Under the Charities Act 2011, gross annual income above 1 million pounds triggers a mandatory statutory engagement. Income between 250,000 and 1 million pounds with total assets above 3.26 million pounds also requires one. Below those thresholds, an independent examination is the minimum legal requirement, but some choose a full external audit voluntarily – particularly where funders, stakeholders and trustees want stronger assurance over the financial position.
Check your charity’s requirements: Our audit calculator tells you whether your charity needs a full audit, an independent examination, or neither.
Groups with subsidiaries face additional rules. If combined income exceeds the threshold, the parent needs a group engagement. CIOs, companies limited by guarantee and unincorporated associations each have different filing obligations.
Charity audit vs independent examination
An independent examination is a lighter-touch review. The examiner checks that accounts are consistent with the underlying records, but doesn’t test transactions in depth.
A full engagement follows International Standards on Auditing (UK). The auditor tests accounting records, internal controls and key judgements, giving a formal opinion on whether the accounts give a true and fair view. You also receive a management letter flagging anything needing attention. For charities and not-for-profit organisations with complex income, grants, restricted funds or VAT obligations, this provides much stronger assurance. Some funders require audited accounts, including donors providing public sector grants or HMRC-regulated tax reliefs.
Who can audit charity accounts?
Where a charity is above the audit threshold under the Charities Act 2011, the work must be carried out by a Registered Auditor. That means a firm entered on the audit register held by a recognised supervisory body, in our case the Institute of Chartered Accountants in England and Wales. Not every accountant qualifies – chartered status alone isn’t enough, and the firm must hold a specific audit registration on top of its practising certificate.
The report is signed in the name of the firm by a Responsible Individual (RI). The RI is the named signatory who takes personal responsibility for the opinion and is themselves listed on the register. The Charity Commission will reject filings signed by anyone outside that framework, and trustees who appoint an unregistered firm are in breach of the Act.
Independent examinations are different. For charities below the threshold, an independent examiner can be a qualified accountant or, for very small charities, a competent person not connected with the charity. The Charity Commission publishes guidance on who qualifies for each tier – the rules tighten as income rises. If your charity is approaching the £1 million income mark, plan ahead: the move from examination to full audit takes preparation, and the firm you appoint needs to be a Registered Auditor from day one.
Audit Group is an ICAEW Registered Auditor with charity sector experience across Manchester and the UK.
Benefits of a charity audit
A well-run engagement does more than confirm numbers add up. It gives the board visibility of financial health, highlights risks early, and delivers recommendations for improving controls. The benefits are practical. Funders gain confidence in the numbers. Trustees get a clear picture of the financial position and reserves. The audit provides evidence that the charity is compliant with Commission and tax rules. And the report carries weight with members of the charity finance community.
Charity accounting and SORP requirements
We follow Charities SORP (FRS 102). Our audit work focuses on the areas where problems most often arise:
- Fund accounting – Checking restricted, unrestricted and designated funds are properly separated. Getting this wrong causes real problems with the Commission.
- Revenue recognition – Verifying grant income timing against SORP requirements for accurate financial statements.
- Trustees’ annual report – Reviewing narrative consistency with the numbers.
- Related party transactions – Disclosure of transactions with connected persons, including donors on the board.
- VAT – Confirming treatment across mixed activities.
- Going concern – Assessing sustainability through reserves, cash flow and income diversity.
How the audit process works
- Planning – We meet your charity finance team to understand activities, risk areas and deadlines, specifying what records and financial information we need.
- Fieldwork – Our not-for-profit team tests income, expenditure, assets and liabilities. We review controls, sample transactions and check disclosures meet SORP requirements.
- Reporting – You receive a clear opinion plus a management letter with practical recommendations.
Charity auditors: common challenges in the not-for-profit sector
Our charity auditors see the same issues repeatedly:
- Restricted fund management – Tracking spend against grants needs good systems. We help your charity set things up from the start.
- Gift Aid claims – Missing declarations and late claims cost millions. We check processes and HMRC compliance as part of each engagement.
- Reserves policy – The Commission expects a justified policy. We help you articulate one for your size and risk profile.
- Accounting services for groups – Where there are trading subsidiaries, the consolidation requirements are often underestimated.
Charity and not for profit trustee responsibilities
Under the law, trustees carry direct responsibility for preparing annual accounts, the report and maintaining adequate charity accounting records. The governance framework means they must actively engage – it can’t be delegated. We work with the board and with the accountant to ensure findings are understood.
Charity and not-for-profit specialists at Audit Group
We’re part of Jack Ross Chartered Accountants, an ICAEW-regulated accountancy firm established in 1948. Our charity and NFP specialists have worked across the NFP sector with organisations of all sizes. The latest charity audit survey data confirms what we see in practice: charities want someone who understands their sector.
- ICAEW-registered – Regulated by the Institute of Chartered Accountants in England and Wales
- SORP specialists – Daily work with Charities SORP, not a sideline
- Fixed fees – Agreed upfront, no hidden extras
- Partner-led – Senior involvement throughout
Not sure whether you need a full engagement or an independent examination? Get in touch for clear advice and a fixed-fee quote.
Want the numbers in detail? Our charity audit thresholds guide sets out the income and asset limits for England and Wales, Scotland and Northern Ireland.
Unsure whether your organisation needs one at all? Our do I need an audit guide covers the company and charity rules side by side.
