The word "independent" is central to independent examination. But what does it actually mean in practice? Here is what the Charity Commission requires.
In the context of charity independent examination, "independent" means the examiner must have no personal or professional connection to your charity that could affect their objectivity. They must be free from any influence that might compromise their ability to give an unbiased opinion on your accounts.
The Charity Commission takes independence seriously because the whole point of independent examination is to have an external person check your accounts. If the examiner is not truly independent, that assurance is worthless.
According to Charity Commission guidance (CC22), the examiner must be independent in both appearance and fact. This means two things:
The examiner must actually be free from any influence or connection that could affect their judgement.
A reasonable person looking at the situation should conclude the examiner is independent.
Both aspects matter. Even if an examiner genuinely feels independent, if it looks like they are not, the public trust in the examination process is undermined.
The Charity Commission sets out specific people who cannot carry out an independent examination:
No trustee of the charity can act as examiner. This includes anyone on the board or committee that manages the charity.
Anyone employed by the charity, whether paid or volunteer, cannot act as examiner.
The examiner cannot be a spouse, partner, or close family member of a trustee or employee of the charity.
Anyone in a business partnership with a trustee or senior employee cannot act as examiner if the partnership is material.
If the examiner owes money to the charity or is owed money by the charity, this creates a conflict of interest.
Beyond the clear-cut cases above, there are other situations that might call independence into question:
Important: Even if one of these situations applies, it does not automatically disqualify someone from being an examiner. The key question is whether a reasonable person would consider the examiner's independence compromised.
Here is what trustees should do to ensure the independent examination is genuinely independent:
Before appointing an examiner, ask them to confirm they have no connection to your charity. A good examiner will proactively disclose anything that might be perceived as a conflict.
The examiner's report should include a clear statement about their independence. If it does not, ask why.
Good practice suggests changing your examiner every few years. This reduces the risk of relationships developing that could compromise independence.
If possible, have different people prepare the accounts and carry out the examination. This provides better separation and reassurance.
If you are unsure whether someone can act as an independent examiner, consider the following:
Our specialist charity accountants are fully independent and meet all Charity Commission requirements. Contact us to arrange your independent examination.