Independent examination or audit: which does your organisation need?

One of the questions we're asked most often is a simple one: does our organisation need an audit? For many faith-based organisations the answer is no — a lighter-touch independent examination is enough. But the distinction isn't always obvious, so here's a plain-English guide.

Two kinds of external scrutiny

Both an audit and an independent examination give people outside your organisation — trustees, members, funders and your regulator — confidence that your accounts can be trusted. The difference is in how far the scrutiny goes.

What is an independent examination?

An independent examination is a review of your accounts by someone independent of your organisation. The examiner checks that your records are consistent with your accounts, that the accounts meet the relevant legal requirements, and that nothing material appears to be wrong. It's less detailed — and usually less costly — than a full audit.

What is an audit?

An audit is a more thorough, formal process. The auditor gathers evidence to give a positive opinion that the accounts give a "true and fair view". It involves more testing and documentation, and it's carried out under formal auditing standards.

What decides which you need?

Several things can determine the level of scrutiny required:

• Your income and assets — larger organisations are generally required to have an audit.
• Your governing document — your own constitution may set its own requirement.
• Your funders — a grant-maker or donor may ask for audited accounts as a condition.
• Where you're based — the rules and thresholds differ between England & Wales, Scotland and Northern Ireland.

The exact thresholds change from time to time, so it's worth checking the current position rather than relying on what was true a few years ago.

Not sure where you stand?

If you're unsure which applies to you, that's completely normal — and it's exactly the kind of thing we can work out with you quickly.

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This article is general information, not advice. Thresholds and requirements change and depend on your circumstances. Check the current position with your regulator, or talk to us about independent examination and we'll help.