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The government are currently consulting on recommendations to increase financial thresholds determining whether charity accounts must be audited or examined.

The consultation is open until the 27th Januaury 2015.

One of the recommendations of Lord Hodgson’s review of the Charities Act 2006 was to increase the financial thresholds above which charities must have their accounts audited rather than independently examined.

Currently, charities that fall into either of the following categories must have their annual accounts audited by a member of the Register of Statutory Auditors:

  • an annual income of more than £500,000
  • assets worth more than £3.26 million and an annual income of more than £250,000

The government is proposing to increase these thresholds to:

  • an annual income of more than £1 million
  • assets worth more than £3.26 million and an annual income of more than £500,000

The government are also consulting on increasing the threshold above which charities must prepare group accounts from a total income of £500,000 to £1 million.

These proposals would make up to 4,000 charities exempt from the expensive requirement for a full audit but still keep an appropriate amount of scrutiny.

The consultation also asks whether the list of professional accountancy membership bodies able to carry out independent examinations for charities with an income of over £250,000 could be extended.

Full details of the consultation, including ways to respond by the 27th January are available on the Government’s website.

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