The Charity Commission has launched a consultation onproposed new directions for independent examiners assessing charities. 

The proposals apply to those charities with annual income between £25,000 and £1m, as these are able to opt for their finances to be scrutinised by independent examination rather than a full audit.

Independent examination is intended as a more limited and lower cost form of assurance.

The last major review of independent examination took place in April 2009, and since then there have been a number of developments.

These include a significant rise in the income threshold at which charities are required to undergo audit rather than independent examination, from £500,000 to £1m, which has led to independent examiners scrutinising larger and more complex organisations.

The Commission also said that the changes reflect “changing expectation of the charity sector” following the collapse of Kids Company, and a parallel consultation on “matters of material significance” that auditors and independent examiners must report to regulators.

New directions

The independent examination consultation proposes new directions regarding examiner independence, conflicts of interest and disclosure of related party transactions.

It also introduces a simpler format for the examiner’s report, and aims to present guidance in plain English, making clear where actions are expected rather than merely recommended.

The consultation closes on 30 September.

Nigel Davies (pictured), head of accountancy services at the Commission, said: “Independent examination is an important form of external assurance to trustees, to the commission and to those using charity accounts.

“We want your views on whether our proposals will improve the independent examination framework and so maintain the confidence of trustees, donors and the public in the accounts of smaller charities.”

Davies will be discussing the consultation in more detail in the July issue of Charity Finance magazine.