UK charity audits: A quick refresher for trustees

In the UK, charity audits are an essential yet intricate part of a trustee’s responsibility – ensuring transparency and fostering trust among stakeholders, including donors, beneficiaries, and regulators.

Understanding the ins and outs of charity audits is imperative for trustees who aim to steer their organisations towards success.

The legal requirement for charity audits

UK charity law stipulates that charities with an annual income exceeding £1 million must undergo an external audit.

For charities with an income between £25,000 and £1 million, a less stringent form of external scrutiny, known as an independent examination, is required.

The audit process: What trustees need to know

Whether you are new to undertaking an audit or have previous experience, here are the things that you should consider:

• Selection of the auditor – The auditor must be a member of a recognised supervisory body and have eligibility to conduct audits. Trustees should invest time in selecting an auditor who not only complies with these criteria but also harbours substantial experience in charity audits.
• Preparation – Preparation is key. Trustees should ensure that financial statements are ready and comply with the Charities SORP (Statement of Recommended Practice) requirements.
• Active participation – Trustees should actively participate in the audit process, furnishing the auditors with necessary information and clarification, and fostering a collaborative and transparent audit process.
• The auditor’s reports– At the end of the audit, the auditor will furnish a report that articulates whether the financial statements give a true and fair view of the charity’s financial health, this Audit Report being included in the Annual Report and Accounts and the second being a management letter or feedback report. It’s imperative for trustees to thoroughly review these reports and address any concerns raised.

The role of trustees post-audit

Once an audit is complete, trustees have two primary duties to fulfil in relation to the audit report they receive, including:

• Implementing Recommendations – Post-audit, trustees should work towards implementing any recommendations or corrective actions suggested in the audit feedback report to ensure the continual improvement of the charity’s financial governance.
• Communication and Transparency – Once the audit is complete and the Annual Report and Accounts signed, trustees are responsible for communicating the results of the audit to stakeholders, maintaining transparency and bolstering trust.

Responsible governance

For trustees, understanding the nuance of UK charity audits is not just a legal requirement, but a cornerstone of responsible governance.

These audits foster trust, ensuring that charities operate within the confines of the law, maintaining a transparent and robust financial health, which in turn, paves the path for sustained success.

Armed with the knowledge and adherence to the principles outlined, trustees can navigate the audit process adeptly, upholding the highest standards of integrity and accountability.

The audit process, thus, becomes not just regulatory compliance but a tool for enhancing the effectiveness and reputation of the charity, steering it towards a future replete with potential and positive impact.

If you have any queries about charity audits or would like any assistance in this area, please speak to our team.