Preparing for your independent examination

When do you require a independent examination?

If a charity has income over £25,000, charity law requires external scrutiny of the accounts. Provided an audit is not required, this requirement can be met with an independent examination.

In order to ensure that a charity is prepared for the independent examination, they must ensure the following.

Accounting records

Accounting records are maintained for the period and that these are kept up to date. These should contain details of all income received, payments made and records of any stock and fixed assets held. These records  should separately identify movements on restricted, designated and unrestricted funds.

All bank statements, for all accounts held in the period under the review should be obtained and provided to the examiner. The year end bank balance recorded in the accounting records should be reconciled back to the bank statements.

A record of period end assets and liabilities should also be prepared and provided to the examiner.

Supporting documentation for all income and expenditure transactions should be retained and provided to the examiner

Should accounting records not be maintained to a reasonable standard, the examiner is required to report this as part of the independent examiners report on the accounts and to the Charity Commission.

Related party transactions

Accounts must be prepared on an accruals basis where income is greater than £250,000 or where the charity is incorporated. When preparing accounts on an accruals basis, management should ensure that all related party transactions are recorded and reported within the draft accounts.


As part of the independent examination, minutes of meetings will be reviewed. These should be retained for all meetings and provided to the examiner.

Going concern

The charity trustees should consider the financial circumstances of the charity at the period end.

For accounts prepared on an accruals basis, the trustees should demonstrate that they have considered  whether the charity will be able to continue in operation for a period of at least 12 months from the date of signing the accounts.

For receipts and payments accounts, the trustees should still demonstrate that they have assessed what invoices, bills and commitments remain outstanding at the end of the reporting period and whether the charity has the ability to settle these.

Trustees Annual Report

This should be prepared to provide an update on the charity’s activities during the year and plans for future periods. As part of the examination process, the content of this will be reviewed to confirm that it complies with legal requirements and further evidence may be required to support narrative on key elements of the report.

If you require any further information or guidance, please contact a member of the charities team at MHA Moore and Smalley on 01772 821 021.