I have prepared a brief synopsis of the Charity Commissions Independent Examiners Guide which is a crucial consideration for any charity regarding its accounts and accounting practices.
No doubt you will be aware that providing your charity income is below £25,000 per annum you will not require an external examination, however above that and below £500,000 you will be able to utilise the service of an independent examiner as long as of course you do not have assets in excess of £3.26 million, even with those assets you could still use an independent examiner if your income is below £250,000, these rules may be overridden by your governing document if a full audit is required.
Who should be your examiner? This is someone believed by your trustees to have reasonable ability and practical experience to carry out a competent examination of the accounts, once income exceeds £250,000 the examiner must be someone who is a member of one of the following bodies:
· Institute of Chartered Accountants in England and Wales
· Institute of Chartered Accountants In Scotland
· Institute of Chartered Accountants in Ireland
· Association of Chartered Certified Accountants
· Association of Public Accountants
· Association of Accounting Technicians
· Association of International Accountants
· Chartered Institute of Management Accountants
· Institute of Chartered Secretaries and Administrators
· Chartered Institute of Public Finance and Accountancy
· Fellow of the Association of Charity Independent Examiners
If the income Is below £250,000 the Charities Commission recommends that if the accruals basis is used for the organisation’s accounts one of the above qualified examiners should be used, if however receipts and payments accounts are prepared a person with financial awareness and numeracy skills should have the requisite ability to act as an independent examiner.
If the examiners charge a fee they should be conversant with the Money-Laundering Regulations and the provisions of the Proceeds of Crime Act 2002. Your examiner must be independent and not influenced by any staff or trustees or have any day-to-day dealings with the organisation.
Your examiner’s report must meet the requirements of the 2008 regulations and have the following information:
· The name of the charity and the period covered by the accounts.
· Eligibility of the charity for an independent examination as opposed to an audit.
· That the examination has followed the directions.
· The examiner’s responsibility to note if particular matters set out in the 2008 regulations come to their attention.
· The basis of the examiner’s report, which helps the reader of the report to understand what the examination involved.
· Where the trustees have obtained a dispensation to have an independent examination instead of an audit, the examiner refers to this fact.
· The examiners name, address and any professional qualification held and, if the charity’s gross income exceeds £250,000, the qualification held which enables them to act as an examiner.
The second part of the report confirms whether or not particular matters were identified during the examination.
· Sufficient counting records have not been kept, or in the case of a charitable company that adequate accounting records have not been kept.
· The accounts do not accord with such records.
· Where the accounts are prepared on an accruals basis, whether or not they fail to comply with relevant accounting requirements under the 2008 regulations or, if a charitable company, with section 396 of the Companies Act 2006, or are not consistent with the SORP.
· Any matter which the examiner believes should be drawn to the attention of the reader to gain a proper understanding of the accounts.
Matters that must be included in the examiner’s report:
· Material expenditure or any action contrary to the trusts of the charity.
· Failure by the trustees to provide information and explanations to which the examiner is entitled.
· Evidence that accounts prepared on an accruals basis are materially inconsistent with the Trustees’ Annual Report and in the case of a charitable company the directors’ report.
· The examiner must sign the report.
All examiners should read the Charity Commission’s Report in detail to understand what books and records need to be examined during the process and familiarise themselves with the requirements. It still remains the responsibility of the trustees to prepare and issue The Trustees’ Annual Report although the independent examiner may help them, the trustees should also file the annual accounts with the commission within 10 months of the financial year end.
The independent examination of charity accounts: examiners (CC32) is available to download in PDF form direct from the Charity Commission website so please ensure your regular examiners have a copy before commencing your next examination.
A reminder for all our member organisations that independent examination is available through SAVS for a chargeable fee based on the hours taken or an assessment of the work. For any information regarding bookkeeping or independent examinations please contact David Robb or Debbie Williams at SAVS on 01702 365005
I hope this proves helpful, I know the accounting side of any club or organisation is often secondary to the desire to achieve an outcome but it is fundamental that each group ensures adequate provisions are in place to report to the Charities Commission.