What is an external audit?
Broadly, an audit involves ensuring that the financial statements do not contain any material errors. We do this by reviewing, evaluating and testing that financial procedures and organisational processes are functioning properly. We check that numbers in the accounts accurately represent things that exist in reality. Audits must comply with the International Standards on Auditing (UK and Ireland). An audit is not to be confused with an independent examination or an accountant’s report.
Why have an audit?
External audits are legally required if:
- You are a registered charity with annual income of over £1m (or income exceeds £250k and gross assets exceed £3.26m)
- Your are an exempt charity (community benefit society) with annual income over £250k
- Your are a co-operative or community benefit society and have not passed the appropriate resolution inn general meeting
- Your members have requested an audit
Voluntary audits are sometimes requested:
- To satisfy existing grant funders
- To make your organisation more attractive to potential grant funders
- To satisfy lending requirements
- To give added assurance to stakeholders
Value-added audits from Slade & Cooper
We recognise that for many small organisations audits can seem like a tiresome and expensive regulatory process with little real benefit. We aim to make this process as smooth and painless as possible, meeting your internal deadlines without stress. We will always visit you as part of the audit so as to gain an in-depth knowledge of your activities and systems. Anything we find out along the way that could be helpful we will discuss with you, for example:
- We will review your income streams in relation to VAT to assess whether registration is necessary, or whether returns are being done correctly
- We will review your systems and governance and let you know of any improvements that could be made
- We will let you know about any regulatory changes that might affect you
And as a Slade & Cooper audit client you know you can always pick up the phone and talk to us – we do not charge for ad hoc advice: see our pricing policy.
Ensuring our independence
- If we are also preparing your accounts, we would normally do this at a separate initial visit and ensure that these are reviewed by staff not involved with the audit.
- Where any independence threat is perceived the file will be reviewed by a second person before finalising the audit (the ‘hot review’).
Do you need an audit?
We are happy to help to reduce the regulatory burden on our clients, and will always advise you when we think an audit is not legally required. Where the income threshold is exceeded due to exceptional circumstances, it may be possible to gain an exemption from the Charity Commission.