Posted: February 26, 2015
The Cabinet Office is pressing ahead with plans to increase the charity audit threshold for England and Wales from £500,000 to £1 million.
This follows a consultation that identified savings in costs and the administrative burden faced by for charities.
These new thresholds are to apply to accounting periods ending on or after 31 March 2015. It will also be accompanied by an increase in the threshold for the preparation of group accounts to align with the audit requirement.
However, there will currently be no changes to either the income or the asset component of the asset threshold for audit, which currently stand assets worth more than £3.26m and an annual income of more than £500,000.
This is to ensure there is no incompatibly between the rules for charities and company law.
The Cabinet Office said the change will mean that around 4,000 charities will be exempt from the expensive requirement for a full audit but will still keep ‘an appropriate amount of scrutiny’.
While the proposals to increase the audit thresholds were largely supported by those who responded to the consultation, by a ratio of 71% to 29%, the ICAS charities committee has indicated that it opposed the changes.
The committee’s concerns rest on the quality of evidence provided by the Cabinet Office, which included a simplistic assessment of anticipated savings and insufficient consideration of the risks which could arise from less robust external scrutiny.
“Charities are major providers of public services and therefore the increase in the audit threshold seems out of step with the changes,” said ICAS. “Similarly, the Charity Commission will receive less comfort about the quality of governance and the financial health of the charities affected.”