External Scrutiny

Every charity, including churches, circuits and districts, must prepare an annual account which should be independently examined or audited depending on the Charity Commission guidelines. However, independent examiners of accounts need to be truly independent.

This means that they are not any of the following:

1. A member of the Church Council or any of its sub committees.
2. An employee or person who receives benefit or support from the Church Council.
3. A close relative, business partner or employee of any of the above.
4. A major donor to the church.

The outline below lists out the guidelines, but further information can be found on the Charity Commission website.

For churches in Scotland, click here for OSCR guidelines.

When an audit is required, then a registered auditor must be appointed (not all qualified accountants are eligible). It is recommended that before an auditor is appointed, the managing trustees should confirm that they are eligible to act in such a capacity. Click here for the register of statutory auditors.

Click here for a template letter of engagement for independent examiners.

Independent Examiner and Audit Guidelines (England, Wales, Scotland, Isle of Man and Channel Islands)

The requirements for reporting, examination, and audit depend on a charity’s gross annual income (1) and, in some cases, total gross assets.

1) Under £10,000 annual income
Charities with annual income under £10,000 must:

• Report Income and Spending
• Answer questions about the charity (2) (not required at this income level)
• Declare serious incidents (not required at this income level)
• Prepare a Trustee Annual Report, unless an exempt charity (3) (not required at this income level)
• Have accounts independently examined (not required at this income level)
• Undergo a Full Audit (not required at this income level)

2) £10,000–£25,000 annual income
Charities with annual income between £10,000 and £25,000 must:

• Report Income and Spending
• Answer questions about the charity (2)
• Declare serious incidents (not required at this income level)
• Prepare a Trustee Annual Report, unless an exempt charity (3) (not required at this income level)
• Have accounts independently examined (not required at this income level)
• Undergo a Full Audit (not required at this income level)

3) Over £25,000 annual income
Charities with annual income over £25,000 must:

• Report Income and Spending
• Answer questions about the charity (2)
• Declare serious incidents
• Prepare a Trustee Annual Report (unless an exempt charity) (3)
• Have accounts independently examined
• Undergo a Full Audit (not required at this income level unless asset thresholds are met)

4) Over £1 million annual income
(£500,000 for Scotland)
and/or
Gross assets over £3.26 million with income over £250,000
(income threshold not applicable to Scotland)

Charities meeting these thresholds must:

• Report Income and Spending
• Answer questions about the charity (2)
• Declare serious incidents
• Prepare a Trustee Annual Report (unless an exempt charity) (3)
• Have accounts independently examined
• Undergo a Full Audit