What is an Independent Examination?

An examination involves a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also involves a review of the accounts and consideration of any unusual items or disclosures identified. Verification and vouching procedures only become necessary where material concerns or doubts arise from procedures, and where satisfactory explanations cannot be obtained from the trustee body.

When may trustees opt for Independent Examination?

Unincorporated charities whose gross income and total expenditure is £500,000 or less in the current financial year and in both of the preceding two years, may elect to have an independent examination unless

• the charity’s governing document stipulates any form of professional audit
• any grant condition demands an audit.
• both their gross assets exceed £3.26 million and their gross income exceeds £250,000

There is, however, no requirement for independent scrutiny where both gross income and total expenditure for the year in question are £25,000 or less.

What records does an organisation need to provide for an Independent Examination?

• Analysis books
• Bank reconciliation statement
• Bank statements, paying in books and cheque book stubs for all accounts for the whole year/period
• Invoices/vouchers to support all payments
• All documents/vouchers to support receipts
• Petty cash analysis book + petty cash vouchers
• Written confirmation that the actual amount of cash agrees with the balance of cash in hand as shown in the petty cash book
• Salary records for each employee
• Copy of the constitution
• Copy of last years audited/examined accounts unless this is your first year
• Minutes of committee meetings (and AGM) held during the year
• Asset register, if you have one, or list of assets purchased during the year
• List of debtors with amounts (if preparing accruals accounts)
• List of creditors with amounts (if preparing accruals accounts)
• Trial balance (if you have one)
• Final accounts (if prepared)
• If you are using accounting software, such as Sage/TAS/QuickBooks etc., then you will need to provide the equivalent of analysis books and, in addition, an audit trail by nominal account printout.

In addition you will need to provide

The trustees annual report accompanying receipts & payments accounts - see charity commission publication CC16 for guidance

or,

The trustees’ annual report accompanying accruals accounts - see charity commission publication CC17 for guidance

If you would like to arrange for an Independent Examination or if you are unable to provide any of the above (e.g. final accounts) then contact us on 01582 733418 for further information.

Charity Commission publications:

 CC16 Receipts and Payments Accounts Pack

This pack is intended for non-company charities under £100,000 per year whose trustees wish to prepare receipts and payments accounts.

CC17 Accruals Accounts Pack

This pack is intended for

• non-company charities with income under £100,000 per year whose trustees wish to prepare accrual accounts; and
• non-company charities with income between £100,000 and £250,000 per year which must prepare accrual accounts.

These publications, and many others, are available online from www.charity-commission.gov.uk or can be ordered by telephone from the Charity Commission Contact Centre on 0845 300 0218.