If you’re a smaller charity or non-profit organisation the difference between an independent examination and a statutory audit can seem unclear, but the requirements are mainly determined by current financial thresholds.
The requirement for any external review begins once your gross annual income goes over £25,000. At this level, your accounts must be reviewed and reported on by an external party, which can be either in the form of an independent examination or statutory audit.
Do you need an audit or an independent examination?
For charities and non-profits with an income between £25,000 and £1 million, an independent examination will be required.
A statutory audit becomes mandatory when your gross income goes over £1 million. You also need an audit if your income is more than £250,000 and your total assets are greater than £3.26 million.
It’s worth noting that the Charity Commission for England and Wales launched a consultation on threshold updates in April 2025, which means these figures may be subject to change in the near future. We recommend checking their website for the most current information before making any decisions about your audit requirements.
What’s the difference between independent examinations and audits?
Both independent examinations and statutory audits involve an external review of your accounts by an independent party, but they provide different levels of assurance and require different approaches.
Independent examinations are slightly more straightforward. An independent examiner provides a statement about whether your charity or non-profit has kept proper accounting records and whether your financial statements comply with accounting requirements. The independent examination process requires less work and can be done by professionals who aren’t necessarily members of regulated accountancy bodies.
Statutory audits are more thorough. A statutory audit requires the auditor to give an opinion on whether your financial statements give a ‘true and fair view’ of your financial position and have been properly prepared according to proper accounting practice and relevant law. Auditors also report on matters such as whether proper accounting records have been maintained, appropriate disclosures have been made and all required information has been provided.
What this means for you
An independent examination can be more cost efficient, whilst a full audit could be more costly depending on the complexity of your accounts and operations. For many smaller charities, having this type of cost difference is an important consideration when planning the annual budget.
For independent examinations,The Charity Commission guidance for England and Wales says examiners must be ‘independent and have the right ability and experience’ and would only require a qualified accountant if your income is over £250,000.
For an audit, finding a regulated auditor and a firm with charity experience can be very helpful as charity accounting has its own specific requirements and terminology.
Planning ahead
Knowing what applies to you is important for budgeting and making sure you stay compliant with The Charity Commission for England and Wales’ requirements. The thresholds are based on gross income and gross assets, so keep an eye on these figures during the year to see if your obligations might change.
If you’re getting close to these thresholds, planning ahead means you can make sure your records are in good order and you have time to find appropriate checking of your financial accounts. This shows good governance and helps maintain confidence in how your charity handles its funds. Starting the process early also means you can submit your annual return to the Charity Commission well before the 10 month deadline after your financial year end.
What we can do to help
Our audit team is here to support you every step of the way. We take the time to get to know your charity or non-profit and work out exactly what you need from the audit process. Our approach is always straightforward and honest and we tailor our service specifically to your needs and circumstances.
Find out more about us on our charity audits page or complete the form below to arrange your no obligation consultation with our qualified charity audit chartered accountants.
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