Michael Cooper-Davis
Partner
Charity and NFP audit
A charity audit is an independent review in which a registered auditor gives an opinion on whether a charity’s accounts give a true and fair view and have been prepared in line with the Charities SORP and charity law. In England and Wales, an audit is required for financial years ending on or after 30 September 2026 if a charity’s gross income exceeds £1.5m, or exceeds £500,000 with gross assets over £5m.
Most smaller charities with income over £40,000 need an independent examination instead, which gives a more limited form of assurance. Price Bailey provides partner and manager-led audits and independent examinations for charities and not for profit organisations.
Building great relationships
We audit registered charities, charitable companies and charitable incorporated organisations (CIOs), as well as membership organisations, trade associations and other not for profit bodies. Every audit is risk-based and led by a partner and manager who know your organisation, so the work goes beyond meeting your statutory obligations and gives your trustees findings they can use.
If you are unsure what level of scrutiny your charity needs, the thresholds and comparison below set out the rules. Our section on independent examination covers smaller charities.
Does your charity need an audit or an independent examination?
In England and Wales, the scrutiny your charity needs depends on its gross annual income and, for larger charities, its gross assets. The thresholds below apply to financial years ending on or after 30 September 2026, as set out in the Charity Commission summary of threshold changes. Years ending before that date use the previous thresholds of £25,000, £250,000 and £1m.
| Gross annual income | Scrutiny required |
| £40,000 or less | No independent examination or audit, unless your governing document requires one |
| Over £40,000 up to £500,000 | Independent examination |
| Over £500,000 up to £1.5m | Independent examination by a professionally qualified examiner, or an audit if gross assets exceed £5m |
| Over £1.5m | Audit |
Your governing document or a funder can require an audit below these levels, and charities in Scotland and Northern Ireland follow separate rules.
Audit and independent examination compared
| Audit | Independent examination | |
| When it applies | Income over £1.5m, or over £500,000 with gross assets over £5m | Income over £40,000 and below the audit thresholds |
| Who can carry it out | A registered statutory auditor | An independent person with the right knowledge and experience, who must belong to a listed professional body where income exceeds £500,000 |
| Level of assurance | A positive opinion on whether the accounts give a true and fair view | Negative assurance, reporting whether any matters of concern have come to the examiner’s attention |
| Scope of work | Risk-based testing of systems, controls and transactions under International Standards on Auditing (UK) | Review of accounting records and accounts, analysis and enquiry, following Charity Commission directions |
| Relative cost | Higher | Lower |
What a charity audit covers
We focus on the areas where charities carry the most financial and operational risk, and we review your risk management processes and risk register alongside the accounts. Our testing covers:
- Revenue recognition, including the timing of donations, legacies, grants and contract income;
- Fund allocation, so that restricted, designated and unrestricted funds are correctly separated and reported;
- Investments, including valuation, custody and consistency with your investment policy;
- Related party transactions and the disclosures they require;
- Payroll and staff costs, usually a charity’s largest expenditure, and the related disclosures;
- Grants received and grants made, including whether conditions have been met;
- Going concern, based on your cash flow forecasts, reserves and future plans;
- Management override, expenditure authorisation and compliance with laws and regulations.
Our approach to working with you
We build long-term relationships based on trust, with a dedicated partner and manager-led team that stays consistent from year to year. We agree scheduling and turnaround times at the outset, base our detailed testing on meetings with your team, and raise any issues promptly and constructively so they can be resolved before the closing meeting. We also keep your trustees informed of regulatory and best practice changes that affect your charity.
Client contact time
Uncharged meeting time is built into every client relationship, so you can call us with a query or to talk through your plans. There are no unexpected fees for ad-hoc calls, meetings or emails.
Independent examination for smaller charities
An independent examination is a lighter form of external scrutiny for charities with gross income over £40,000 that fall below the audit thresholds. The examiner reviews your accounting records and accounts and reports whether any matters of concern have come to their attention, rather than giving a true and fair opinion. From 30 September 2026, charities with income over £500,000 need an examiner who is a member of a listed professional body. Below that level, any independent person with the right knowledge and experience can act, as long as they have no close connection with the charity.
The higher thresholds mean some charities that currently have an audit can now choose an independent examination instead, which usually costs less. Before you switch, check your governing document and funding agreements, and consider whether your trustees and funders value the assurance an audit provides. We carry out independent examinations in line with the Charity Commission’s directions for independent examiners (CC32), and we can help you decide which route is right for your charity.
Frequently asked questions
What is a charity audit?
A charity audit is an independent review of a charity’s annual accounts by a registered statutory auditor, who gives an opinion on whether the accounts give a true and fair view and comply with the Charities SORP and charity law. In England and Wales, it is required where gross income exceeds £1.5m, or exceeds £500,000 with gross assets over £5m.
What is the difference between an audit and an independent examination?
An audit gives a positive opinion on whether the accounts give a true and fair view, based on detailed testing of systems and transactions. An independent examination gives negative assurance: the examiner reports whether any matters of concern have come to their attention. Independent examination involves less work, so it usually costs less.
When do the new charity audit thresholds apply?
The new thresholds apply to financial years ending on or after 30 September 2026. They raise the audit threshold from £1m to £1.5m of gross income, the assets test from £3.26m to £5m, and the independent examination threshold from £25,000 to £40,000.
Can our charity switch from an audit to an independent examination?
Yes, if your income and assets fall below the new audit thresholds, unless your governing document, a funder or a lender requires an audit. Many trustees keep an audit voluntarily because of the stronger assurance it gives, so the decision should weigh cost against what your stakeholders expect.
Who can carry out an independent examination?
Any independent person with the right knowledge and practical experience can examine a charity with gross income up to £500,000. Above that level, the examiner must be a member of a professional body listed in the Charities Act 2011, such as ICAEW, ACCA or the Association of Charity Independent Examiners.
Our charity audit team is regularly ranked highly for both charity service and charity expertise in the Charity Finance audit survey
We can help
Contact us today to find out more about how we can help you