Charity Independent Examinations

To maintain public confidence in the work of charities, charity law requires most charities to have an external scrutiny of their accounts. Provided a charity is not required by law or its governing document to have an audit then trustees may choose a simpler and less expensive form of external scrutiny called an independent examination.

An independent examination is a simpler form of scrutiny than an audit but it still provides trustees, funders, beneficiaries, stakeholders and the public with an assurance that the accounts of the charity have been reviewed by an independent person.

What will a Charity Indpendant Examiner Report?

An examiner, in their report, is only required to confirm that "no evidence has been found that suggests certain things have not been done by the charity." This form of ‘negative assurance’ is a more limited form of scrutiny. The examiner is not acting as an auditor and so is not required to plan their work, to identify fraud or to test the internal financial controls operating in the charity.

What does a Charity Independant Examination Involve?

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 the consideration of any unusual items or disclosures identified. It is important to note that verification and vouching procedures, where an item in the accounts is checked against an original document such as an invoice or a receipt, only becomes necessary where significant concerns are identified from the work of the examiner, or where satisfactory explanations cannot be obtained from the trustees.

In the examiner’s report, the examiner is only required to provide a statement on specific matters that have come to their attention as a result of the examination procedures specified in the Directions made by the Charity Commission. This is a simpler requirement than that of an audit. An auditor is required to build up a body of evidence to support a positive statement of opinion on the accounts. In particular, an auditor is required to form an opinion as to whether the accounts show a ‘true and fair view’.

Where a significant concern relating to the accounts that the examiner considers important to the understanding of the accounts remains unresolved or other matters arise that must be included in the examiner’s report come to the examiner’s attention, then consideration will be needed as to how this is reported. If a matter is identified which is likely to be of material significance to the Charity Commission, the examiner also has to make a separate report on that matter to the Charity Commission in addition to the examiner’s report attached to the accounts.