An independent examination and an audit are both external reviews of a charity’s accounts, but they differ in depth, in who can perform them and in the assurance they give. An examination checks that the accounts follow the records and flags matters of concern. An audit tests the figures far more deeply and ends in a formal opinion on whether the accounts give a true and fair view. Audits cost more because they involve much more work.
This guide covers charities registered in England and Wales. Charities in Scotland and Northern Ireland follow different rules set by their own regulators. Which one your charity needs is set by law according to income and asset levels, and sometimes by your own governing document or a funder. The current thresholds are published on GOV.UK, so we deliberately do not quote figures here.
Independent examination vs audit: the two reviews side by side
| Independent examination | Audit | |
|---|---|---|
| Depth | Review of records and accounts, focused on obvious problems | Detailed testing of transactions, balances and controls |
| Outcome | Examiner’s report noting whether concerns arose | Formal opinion on whether accounts are true and fair |
| Who performs it | An independent person with the right ability, or above a published income level a member of a listed professional body | A registered auditor |
| Typical cost | Lower, reflecting the lighter scope | Higher, reflecting the depth of testing |
| Assurance level | Negative assurance, meaning the examiner reports whether anything of concern came to light | Reasonable |
What an independent examiner actually does
The examiner checks that accounting records exist and that the accounts agree with them, reviews the accounts for anything obviously wrong or inconsistent, and considers whether anything suggests the trustees have not met their duties. They do not verify every transaction and do not express an opinion that the accounts are correct. Their report says, in essence, that nothing worrying came to their attention. In England and Wales, who may examine depends on the charity’s income rather than on how the accounts are prepared. Below a published income level any independent person with the right ability and experience may act; above it the examiner must be a member of one of the professional bodies named in the Charities Act. Check the current level on GOV.UK, and note that Scottish charities follow different rules set by OSCR.
What a charity audit involves
An auditor plans the work around where the accounts could be materially wrong, tests samples of transactions and balances, examines controls, confirms balances with third parties where needed, and challenges judgements the trustees have made. The result is a formal audit opinion. The process asks far more of the charity’s records and of staff and trustee time, which is why audit is reserved for larger charities and special situations rather than applied to everyone.
How eligibility between the two is decided
The rules work on bandings. Below a certain income level, no external scrutiny is required at all unless the governing document demands it. Above that, an independent examination is required. Above higher income or asset levels, a full audit becomes compulsory. Three other triggers can override the bandings: a governing document that specifies audit, a funder or lender that requires one, and a trustee decision to commission one voluntarily. Check the current figures on GOV.UK before assuming your position, and remember that connected tax obligations, covered in the GOV.UK guidance on charities and tax, apply regardless of which review you need.
Getting your accounts ready for either review
Both reviews go faster and cheaper when the records are complete: reconciled bank accounts, income analysed by fund, grant paperwork filed and minutes up to date. The groundwork is the same list we set out in the charity bookkeeping records checklist, and the accounts themselves should already contain everything described in what charity accounts should include. Fund accounting errors are the most frequent finding in both examinations and audits, so the treatment of restricted and unrestricted funds deserves particular care before handover.
Choosing who carries out the work
For an examination, independence matters as much as ability: the examiner cannot be a trustee, a close relative of one, or anyone else with a stake in the result. For an audit, only a registered auditor can act. Either way, appoint early rather than at the filing deadline, because good reviewers get booked up. If you are unsure which route applies to your charity or who could carry it out, get in touch and we will talk it through.
Frequently asked questions
Can our regular accountant carry out the independent examination?
Only if they are genuinely independent of the charity’s administration and did not effectively prepare the accounts they would be examining. Many charities use one firm to prepare and a different person or firm to examine, which keeps the independence question clean.
Is an independent examination a legal requirement or best practice?
Above the relevant income level it is a legal requirement, not a courtesy. Below it, scrutiny may still be required by your governing document or a funder, and some trustees commission one voluntarily for reassurance.
What happens if the examiner finds a problem?
They raise it with the trustees, and certain serious matters must be reported directly to the regulator. Most findings are record-keeping weaknesses that trustees fix for the following year rather than crises.
Can a charity choose an audit even when an examination would do?
Yes. Trustees sometimes opt for audit voluntarily because a major funder expects it or the charity is approaching the audit threshold anyway. It is a cost and assurance trade-off the board can make.
How we can help
Our charity accounting support covers bookkeeping, accounts preparation and getting your records ready for whichever review applies. We do not carry out independent examinations ourselves, but we can help you work out which review your charity needs and prepare for it. Request a quote to talk it through.