What Is the Difference Between an Independent Examination and an Audit?

Many charity trustees are unsure whether their charity needs an independent examination or an audit. Both involve someone outside the charity looking at the accounts, but they are not the same. The good news is that most charities do not need an audit.

Understanding the difference helps trustees stay compliant without paying for more work than necessary.

What Is an Independent Examination?

An independent examination is a straightforward, independent review of a charity’s accounts.

The examiner does not check every transaction or look for fraud. Instead, they:

• Review the accounting records

• Look at the charity’s activities

• Ask questions where something is unclear

Their role is to consider whether anything comes to their attention that suggests the accounts are wrong or misleading.

Independent examinations are designed for small and medium-sized charities.

Does an Independent Examiner Need to Be Qualified?

Yes — in most cases.

For charities with income over £250,000, the independent examiner must be professionally qualified or have relevant accounting experience. This means someone with recognised accountancy qualifications and charity accounting knowledge.

Using a qualified examiner gives trustees confidence that:

• The accounts follow charity law and the Charities SORP

• Issues are identified early

• The examination will stand up to Charity Commission scrutiny

Firms such as Skyrock Accountants, led by a Chartered Certified Accountant, meet these requirements and regularly act as independent examiners for charities.

When Does a Charity Need an Independent Examination?

In England and Wales, a charity usually needs an independent examination if:

• Its annual income is over £25,000, and

• It does not meet the legal rules for an audit

For charities with income between £25,000 and £1 million, an independent examination is normally enough, unless the governing document or a funder says otherwise.

What Is a Charity Audit?

A charity audit is much more detailed.

An auditor checks the accounts carefully and gathers evidence to confirm they give a true and fair view.

In simple terms, “true and fair” means the accounts are accurate, complete, not misleading, and properly show the charity’s financial position and activities for the year.

Because audits involve detailed testing and checks, they take longer and cost more.

When Is a Charity Legally Required to Have an Audit?

A charity usually needs an audit if:

• Its income is over £1 million, or

• Its income is over £250,000 and total assets are over £3.26 million, or

• The charity’s governing document requires an audit

Some funders or lenders may also ask for an audit, even if the charity is below these thresholds.

What Is the Main Difference Between an Independent Examination and an Audit?

The main difference is how much checking is done.

An independent examination provides limited assurance. The examiner reports that nothing appears to be wrong.

An audit provides higher assurance. The auditor actively checks and confirms the figures.

Put simply:

• Independent examination: “Nothing looks wrong.”

• Audit: “We’ve checked and are satisfied it’s right.” - They give an opinion

Are Trustees Still Responsible for the Accounts?

Yes — always.

Trustees remain responsible for the charity’s finances and accounts, whether the charity has an independent examination or an audit. External reviews support trustees but do not remove trustee responsibility.

Need Help or Unsure What Your Charity Needs?

If you are unsure whether your charity needs an independent examination or an audit, it’s best to check early. Getting this right avoids delays, unnecessary costs, and compliance issues later.

Skyrock Accountants regularly support trustees with independent examinations and charity accounting, providing clear advice and a straightforward process.

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