Understanding why independent examinations are required and what they aim to achieve for UK charities.
The purpose of an independent examination is to provide assurance that a charity's accounts are accurate and have been properly prepared. It is an independent check, carried out by someone outside the charity, to confirm that the financial information trustees are presenting is reliable.
Think of it this way. When trustees prepare accounts, they are effectively saying "here is how we have spent the charity's money." An independent examination is someone else looking at those accounts and saying "yes, these look right" or "here are some concerns we have spotted."
This gives trustees comfort that they are fulfilling their duties, and it gives donors, funders, and the public confidence that the charity is being run properly.
Independent examination serves several important purposes for charities:
Trustees have a legal duty to ensure proper financial management. An independent examination gives trustees confidence that the accounts are in order. It is an external check that helps trustees fulfil their responsibilities properly.
When people give money to charity, they want to know it is being used properly. An independent examination provides that assurance. Many funders will not give grants to charities that cannot demonstrate proper financial oversight.
For charities with income between £25,000 and £1 million, having an independent examination is the law. It is a statutory requirement that keeps your charity in good standing with the Charity Commission.
The independent examination report gets filed with the Charity Commission and appears on the public register. Anyone can look up your charity and see that its accounts have been independently checked.
An experienced examiner may identify issues in your financial processes before they become serious problems. This can save your charity from bigger issues down the line.
Knowing that an independent person will review your accounts encourages better bookkeeping throughout the year. Many charities find their financial processes improve simply because they know the examination is coming.
When an independent examination is complete, it achieves the following:
It is equally important to understand what independent examination does not achieve:
Several groups benefit from the independent examination process:
They get assurance that their financial oversight is working. It helps them fulfil their legal duties and sleep better at night knowing the accounts have been checked.
They can give with confidence, knowing that someone independent has checked how their money is being used.
They can see evidence that the charity takes financial management seriously before awarding grants.
The public register shows that UK charities are being properly overseen, maintaining trust in the charity sector.
The purpose of an independent examination is to provide independent assurance that your charity accounts are accurate and properly prepared. It serves multiple purposes:
Our specialist charity accountants have years of experience carrying out independent examinations for charities across England and Wales. We can help ensure your examination runs smoothly and provides the assurance you need.