Your charity's accounts must be externally scrutinised. That is, someone who is independent of your charity must review the accounts and produce a report, attached to the accounts, that highlights any issues to the reader.
Choosing the right form of external scrutiny
The type of external scrutiny you choose depends on your charity's governing document, gross income and net assets and whether or not your charity is also a company.
To understand what form of external scrutiny is required for your charity's accounts, refer to section 3 and figure 2 within our accounts guidance.
There are two recognised forms of external scrutiny.
An independent examination looks at a charity's accounting records and annual accounts and considers whether the accounts are a fair reflection of the underlying records. It provides a degree of comfort to the reader that the figures in the accounts and the Trustees' Annual Report present an accurate picture of the financial activity of the charity for the accounting period.
Consideration is also made of any unusual items in the accounts that may require further discussion or an explanation from the charity trustees.
Read our Independent Examination guidance for further information. You can choose to view the guidance in full or read specific sections which have been written with particular groups in mind.
Under the accounting regulations, if the term 'audit' is used in your charity's constitution or governing document, you must have your accounts audited by either:
- a registered auditor
- the Auditor General for Scotland
- an auditor appointed by the Accounts Commission for Scotland (responsible principally for public bodies).
Audits are more commonly required for larger charities, although smaller charities may also have to have an audit if this is stated the in governing document or through a decision made by the charity trustees.