Income decides it, mostly. Below £40,000, you usually need no external scrutiny at all. Above that, you need either an independent examination or a full audit, and most small charities can choose the examination, which is lighter and cheaper. At £1.5 million, the choice disappears, and it has to be an audit.
Two things override all of that, and they catch charities out every year. This is how the thresholds work, what overrides them, who you are allowed to appoint, and the part trustees hand to someone else and then stop thinking about.
One thing worth saying at the start. An independent examination is not a box your accountant ticks. It is a legal duty the trustees own from beginning to end, and most of what follows is about that rather than about accounting.
If the wider governance needs attention, governance support is where that sits.
Check your year-end before you check the figures
The income thresholds have changed, and the test is not today’s date. It is your accounting year-end.
The new figures apply to accounting years ending on or after 30 September 2026. If your year ended before that, the older thresholds still govern your accounts, whatever the calendar says when the board meets. A charity with a March year end sitting down in November is still on the old set for the year just gone.
Every figure below is the new one. Check which set applies to the period you are dealing with before acting on any of them – and note that the charity SORP was updated separately, for accounting periods beginning in January 2026. Two different dates, two different rules, and they are easy to conflate. The wider picture is in our overview of charity accounting.
The thresholds
Income of £40,000 or less; you do not usually need external scrutiny at all.
Above £40,000, you need an independent examination or an audit. Most charities in that range can choose, and the examination is the lighter-touch option.
The choice ends at £1.5 million of income. Above that, it must be an audit.
There is also an asset test that catches charities with property. Income over £500,000 combined with assets over £5 million means an audit, regardless of where you sit on the income scale otherwise.
Getting this wrong costs you in both directions. Pay for scrutiny you do not need, and that is money taken off the charitable work. Skip scrutiny you do need, and the trustees have breached their duties.
The two things that override the thresholds
Your governing document comes first. If it says the accounts must be audited, they must be audited, whatever the income is. If that is unaffordable, the answer is to amend the document rather than to ignore it, and changing your charity’s governing document covers the process – this is not usually a change that needs the Commission’s authority.
A funder comes second. If a major grant carries an audit condition, you are doing an audit. The threshold does not release you from a contract you signed.
One genuinely useful detail on old governing documents. If yours is dated before 1 March 1992, the word “audit” in it may not mean a formal audit. Unless the document names a qualified auditor or accountant, the Commission’s position is that the word can simply mean independent scrutiny – which means an examination may satisfy it. A board about to commit to an audit it cannot afford should read the clause carefully before assuming it is stuck.
Who you are allowed to appoint
This is where trustees get it wrong most often, and the law is specific. You must appoint an independent person with the ability and practical experience to carry out a competent examination. Two tests sit inside that sentence, and they work differently.
1) Independence
Your examiner cannot be a trustee. That one is absolute.
Beyond it, the Commission lists the relationships that call independence into question. Not an employee of the charity, and not your bookkeeper. Not a member of a sub-committee overseeing the finances. Not a major donor and not a beneficiary. Not someone with a significant financial or commercial relationship with the charity or its trustees. And not someone with a close personal relationship with any trustee.
Notice what is absent from that list. Being a supporter is fine. Someone can care about the work, give twenty pounds a month, and still examine. Independence is not about having no connection. It is about having no connection that could influence the judgement.
So, three cases boards ask about. The bookkeeper who does your payroll cannot examine – too close to the records. A trustee’s brother-in-law almost certainly cannot, because that is a close personal relationship with a trustee. The retired accountant who volunteers at your charity probably can, as long as they are not keeping your books and not close to your board.
2) Competence
Above £500,000 of income there is a hard rule. Your examiner must be a member of one of the accountancy bodies named in the Charities Act. That is law rather than preference, and the list with links to check membership is in the appendix to the Commission’s guidance CC31.
Below £500,000 you are not legally required to appoint a qualified member, which is not the same as saying you should not. If you prepare accruals accounts, your examiner needs to understand accounting standards and the SORP, and the Commission recommends a qualified member anyway. If you prepare receipts and payments accounts, the bar is enough financial awareness, numeracy and relevant experience to make the judgements involved.
And a question worth asking whoever you are considering, because qualified is not the same as current. The SORP changed for accounting periods beginning in January 2026. Ask directly whether they are up to speed on it.
3) Three things to ask before you appoint
Ask every examiner to confirm they have read and understood the Commission’s Directions for examiners. Ask professional examiners for proof of membership, and check it using their body’s online search tool rather than taking the letters after their name on trust. Ask a non-professional examiner to explain their skills and why those skills make them competent for your charity’s accounts.
Then the part most boards miss entirely. The decision to appoint must be recorded in writing, in your minutes. Not agreed in a conversation after a meeting. A minuted decision, with the reasoning – which is the same standard that applies to any trustee decision that might be examined later, and which the record itself has to show. What minutes need to capture is covered in charity record keeping.
The rule that carries criminal weight
You must respect your examiner’s independence, and you must not act in a way that undermines it. In practice that means you cannot make the work conditional on them accepting a particular accounting treatment.
The Commission is direct about the consequence. That kind of behaviour may constitute an offence under the Bribery Act 2010, and it could also amount to misconduct in the administration of the charity. It is the sharpest thing in this whole subject and it is almost never mentioned – a board leaning on an examiner to see something its way has moved from a governance problem into territory where trustees carry real exposure.
Crossing a threshold is usually the point a board notices its governance has not kept pace with its income. If that is where you are, book a call. It is a straight conversation about what the board needs to have in place, not a sales pitch, and it is not accountancy – for the accounts themselves you want a charity accountant.
Preparing, and working backwards from the deadline
You have ten months from your year-end to file with the Commission. If the charity is also a company, Companies House wants the accounts within nine months. Work backwards from whichever comes first.
Finding and appointing an examiner takes time, and the Commission says so plainly. Leaving it until the accounts are due is how charities end up filing late, and late filing shows on your public register entry where funders can see it.
Agree two dates with your examiner at the outset: when they will receive the draft accounts and records, and when the examination itself happens. Then get the records ready – details of all money received and paid out, assets and liabilities at the year end, the governing document, and the trustee meeting minutes. Schedule the examination for a time when trustees and staff are around, because the examiner will have questions.
One thing that surprises people. Your examiner is allowed to help prepare the accounts as well as examine them, provided they are not maintaining your accounting records and not involved in running the charity day-to-day. The accounts remain the trustees’ responsibility either way. You keep oversight, and you ask for changes where you think they are needed.
For a charity on £120,000 with a March year-end, filing falls due at the end of January. The examiner needs the draft by October at the latest, which means appointing them over the summer. That rhythm is what keeps this routine rather than urgent, and it belongs in the quarterly financial questions the board asks anyway.
What the report covers, and what to do with it
An examiner’s report is narrower than an audit opinion, and boards routinely read more into it than it says.
The examiner reports whether they have reasonable cause to believe proper accounting records were not kept, or that the accounts do not match those records, or – for accruals accounts – that they do not follow the legal requirements and the SORP. They are not forming an opinion on whether the accounts are true and fair. That is an audit, and it is a different job.
Any other significant concerns go in the report to the trustees as well. Spending that does not fit the governing document, for instance.
Separately, there is a set of matters an examiner must report to the Commission directly, without going through you. Dishonesty and fraud. Money laundering and criminal activity. Failure to manage significant conflicts of interest. That is a statutory duty on the examiner and nothing the trustees can influence, which is another reason conflicts of interest need managing rather than mentioning.
If your examiner raises something, work with them to resolve it; usually by providing more information or evidence. Sometimes it cannot be resolved, because the records genuinely were not kept. In that case, you fix it for next year rather than arguing about this one.
Then finish properly. One or more trustees sign the accounts and annual report on behalf of the board. Electronic signatures are fine unless your governing document says otherwise. File the examiner’s report alongside the accounts and the annual report within ten months of the year end. You can ask your examiner to file for you, and you remain responsible for it being filed and for making sure filed on time.
Three things worth doing this month
Find out who examined your charity’s last set of accounts, and run them against the independence list. Employee, bookkeeper, finance sub-committee member, major donor, beneficiary, close relationship with a trustee. Any of those and you have something to fix.
Open your governing document and search it for the word audit. If it is there, you may not be free to choose an examination – and if the document predates March 1992, check what the word means in it before you accept the cost.
Put the examiner appointment on the agenda for your next board meeting, make the decision properly, and make sure the minutes record it in writing.
If you only do one, do the first.
