If you’re running a charity in the UK, ensuring your accounts are accurate, compliant and clearly reported is vital to maintaining public trust and fulfilling your legal obligations. One way of doing this, especially for smaller and mid-sized charities, is through a charity independent examination. While not as complex or extensive as a statutory audit, an independent examination still offers a robust check on your charity’s finances and can highlight any areas of concern.
At Millet Audit, we work closely with charities across the UK to provide independent examinations that are both thorough and cost-effective. In this blog, we’ll explore what a charity independent examination involves, who needs one, what the process looks like, who can carry it out, and why it’s an important part of good charity governance.
Understanding Independent Examinations for Charities
A charity independent examination is a form of financial scrutiny that sits between a basic review of accounts and a full statutory audit. It is designed for charities that are not legally required to undertake a full audit but whose income is over a certain threshold. The purpose of the examination is to provide an external check that the charity’s financial statements are consistent with its accounting records and have been properly prepared.
The key benefit of an independent examination is that it gives trustees, regulators, funders, and the public confidence in the accuracy and integrity of the charity’s financial reporting. It also helps identify any errors or inconsistencies and offers practical guidance on how the charity can strengthen its financial controls and record-keeping.
Unlike an audit, which involves extensive testing of financial transactions and systems, an independent examination is based primarily on enquiry and analysis. This makes the process less intensive, quicker, and more cost-efficient, while still offering a meaningful level of assurance.
Who Needs an Independent Examination?
Not all charities need a full audit. In fact, most smaller charities are legally required to have an independent examination instead. Under UK charity law, an independent examination is mandatory if a charity’s gross annual income exceeds £25,000 but falls below the current audit threshold.
As of current UK regulations, an audit is only required if a charity’s income exceeds £1 million, or if income exceeds £250,000 and the charity’s assets are worth more than £3.26 million. If a charity falls below these thresholds but has income above £25,000, then an independent examination becomes the default legal requirement.
Charities with income below £25,000 are not legally required to have any form of external scrutiny, though some may still choose to have an independent examination for added transparency. This can be helpful when applying for grants or building credibility with donors and trustees.
At Millet Audit, we advise charities on whether an independent examination or a full audit is required, and we ensure all financial reviews are carried out in line with the latest Charity Commission guidance.
What Does an Independent Examiner Do?
The role of the independent examiner is to review a charity’s financial statements and underlying records to ensure they are consistent, accurate, and properly prepared. The examiner’s task is not to express an audit opinion, but to state whether anything has come to their attention that suggests the accounts have not been prepared in accordance with relevant legislation.
During the examination, the independent examiner will typically look at bank statements, receipts, payment records, and accounting software outputs to verify that the accounts reflect the charity’s financial position. They will check whether records are complete, whether accounting policies are appropriate, and whether the trustees’ annual report is consistent with the financial statements.
If the examiner finds any material discrepancies or areas of concern, they may raise these with the trustees and request clarification. If serious issues arise, the examiner may be obliged to report them to the Charity Commission, particularly if they involve mismanagement, fraud, or failure to comply with legal duties.
Throughout the process, the examiner should remain objective and professional, offering constructive feedback to help the charity improve its financial systems. At Millet Audit, we focus on delivering independent examinations that are supportive as well as compliant, helping charity trustees better understand their financial responsibilities.
Who Can Carry Out an Independent Examination?
Not just anyone can perform an independent examination. There are legal requirements around both the skills and independence of the examiner. Firstly, the person conducting the examination must have the appropriate financial knowledge and experience to understand charity accounting. This typically means the individual is a qualified accountant or has extensive experience in financial reporting.
If the charity’s income exceeds £250,000, then the examiner must be a member of one of the main UK professional accounting bodies, such as the ICAEW, ACCA, CIPFA or ICAS. These qualifications ensure the examiner understands both the accounting standards and the charity-specific regulations involved.
Equally important is the requirement for independence. The examiner must have no connection to the charity that might compromise their objectivity. This means they cannot be a trustee, employee, close relative, or someone with a significant financial interest in the charity. Their independence is vital to maintaining trust in the review process and ensuring that their findings are impartial.
At Millet Audit, all of our examiners meet the required professional and ethical standards. We understand the importance of independence and always ensure that our review is carried out with integrity, professionalism, and a focus on compliance.
How the Independent Examination Process Works
The process of conducting an independent examination begins with gaining a clear understanding of the charity and its activities. The examiner will request the financial statements, accounting records, and any other relevant documentation such as minutes of trustee meetings and the charity’s governing documents.
Next, the examiner performs an analytical review of the financial statements to assess whether the figures are reasonable based on the charity’s known activities. They will compare the current year’s results to the previous year, identify any unusual transactions, and check for consistency across the records.
The examiner will also look for evidence that proper accounting records have been kept, that funds have been applied in accordance with the charity’s objectives, and that the trustees’ report fairly reflects the charity’s operations and financial position.
After the examination is complete, the examiner prepares a report which must be submitted alongside the charity’s financial statements to the Charity Commission. This report confirms whether the examiner has found anything that gives cause for concern and outlines the basis of their review.
Millet Audit ensures that this process runs smoothly for all our charity clients. We provide clear checklists in advance, explain each stage of the examination, and deliver the final report in a timely and accessible format.
Why an Independent Examination is Valuable
For many charities, an independent examination is not just a legal requirement but an opportunity to enhance accountability and demonstrate financial responsibility. It provides trustees with assurance that the charity’s finances are being handled properly and offers donors and supporters confidence in how funds are managed.
Because the process is more focused and cost-effective than an audit, it is ideal for charities with limited resources that still want to be transparent and well governed. The independent examiner’s findings can help improve internal processes, reduce errors, and avoid future compliance issues.
Furthermore, the presence of an external, impartial review adds to the credibility of the financial statements. This can be especially valuable when applying for grants, forming partnerships, or publishing your annual report for public consumption.
At Millet Audit, we believe that the best independent examinations are not just about compliance but about helping charities grow stronger and more resilient. Our team provides feedback that goes beyond the numbers, offering practical advice to trustees on improving their financial controls and planning.
Common Pitfalls and How to Avoid Them
Even with the best intentions, many charities make avoidable mistakes when it comes to preparing for an independent examination. One common issue is poor record-keeping. Missing or incomplete records can delay the process or raise concerns that lead to a qualified report. Trustees should ensure that income and expenditure is clearly documented and that bank accounts are reconciled regularly.
Another issue is failing to submit accounts and the examiner’s report on time. Charities must file their documents with the Charity Commission within 10 months of their financial year-end. Late filings may be publicly flagged and could affect funding opportunities. Starting the examination process early is key to avoiding a last-minute rush.
Sometimes, charities assume that an independent examination is informal and not particularly important. In reality, it is a regulated process with specific legal standards. Choosing an unqualified or closely connected individual to act as examiner can invalidate the report and result in regulatory problems.
Millet Audit helps charities prepare for and navigate the entire process. We flag potential issues early, keep trustees informed, and ensure everything is filed correctly and on time.
Final Thoughts on Charity Independent Examinations
A charity independent examination is more than a compliance exercise. It is a crucial part of responsible financial governance that helps charities demonstrate accountability, protect their reputation, and build trust with donors, regulators, and the public.
For many organisations, it offers a more affordable and proportionate alternative to a full audit, while still providing a meaningful level of external scrutiny. Choosing the right examiner—someone with the right skills, independence, and sector understanding—is essential to making the most of the process.
At Millet Audit, we work with charities of all sizes to deliver high-quality independent examinations across the UK. Whether you’re approaching the £25,000 income threshold for the first time or managing a well-established charity, we can help you stay compliant and confident in your financial reporting.
If you’d like to find out more or get help with your next independent examination, contact us. Our experienced team is here to support your charity with clear advice and practical solutions every step of the way.