To audit or not to audit?
Does your governing document, which sets out the rules by which the charity must operate, require your charity’s accounts to be audited? The governing document in your charity may be your constitution, trust deed or memorandum and articles of association.
As this document forms the basis for how the charity operates it is important to make sure that it is fit for purpose. Some governing documents contain reference to a requirement for an audit as a generic term for checking the accounting records. The word audit in charity law will mean that the accounts need a full statutory audit by a registered auditor, even where the law would not require it on the basis of the charity’s income or asset levels.
If this is the case, it may involve additional expense for the charity. You may want to amend your governing document so the charity trustees can choose not to have an audit if it would not be otherwise required.
The use of the wording: ‘the accounts should be subject to external scrutiny in line with the relevant requirements of legislation’ would allow the charity to use the form of scrutiny the law permits depending on the income or asset levels in a given year. The charity must also consider any other relevant legislation applicable to them or the requirements of any funders.
Where changes are made to the governing document in respect of this you must advise OSCR within three months of the change taking place. Before making any changes to your governing document you must check that the document allows for such changes to be made.
More information about making changes to your charity and advising OSCR of changes can be found here.