Charities shoulder vital responsibilities in their communities. Their finances and reporting need a clear line of sight. That’s where independent examinations for charities come into play. They offer a reliable method of financial scrutiny without the higher reporting burden of a full audit.

If you run a charitable organisation, it’s worth knowing the thresholds and processes. This blog sets out what’s involved, who can perform an independent examination, and how charities can stay on top of their obligations in the 2025/26 tax year.

Introduction

Charities in the UK operate under specific financial and reporting rules. The Charity Commission sets these rules, and they can differ depending on your charity’s income. A charity with income above certain thresholds can’t just file basic accounts; it may need an independent examination or, in some cases, a statutory audit.

An independent examination is less intensive than an audit. It checks whether the accounts are consistent with the charity’s records, and it focuses on whether certain statements in the accounts look accurate. According to the Office for National Statistics (ONS), the charity sector contributes more than £17bn to the UK economy each year. That kind of economic impact demands clarity and transparency. Many charities use independent examinations to demonstrate that they’ve kept proper accounting records and produced sound financial statements.

Below, we explain the basics, outline key thresholds and describe how an independent examination for charities differs from an audit. We’ll also give tips on how to prepare if you need one.

What is an independent examination?

In simple terms, an independent examination for charities is a form of external review. It confirms that the charity has accounted for its income and spending in line with relevant accounting standards. It’s not as heavy as an audit, and it doesn’t involve testing and verifying every transaction. Instead, the examiner checks the statement of accounts for any obvious mistakes or inconsistencies.

If your charity’s yearly income sits within certain levels, you can opt for an independent examination instead of an audit. This keeps costs down while still giving your trustees, donors and beneficiaries confidence that your financial statements are accurate.

When is an independent examination required?

You’d normally arrange an independent examination if your charity’s gross income is above £25,000 but below the statutory audit threshold. As of the 2025/26 tax year, that threshold is set at £1m for most charities. However, there are other considerations.

• If your gross income exceeds £1m, you need an audit rather than an examination.
• If your charity’s assets are more than £3.26m and your income is over £250,000, you’ll need an audit.
• Some charities choose an audit even if they’re not legally required to do so because it can be reassuring for donors or grant-making bodies.

How does it differ from an audit?

An audit is more detailed and involves a deeper dive into your charity’s financial statements. An independent examination for charities is limited to a review of accounts against records, rather than a complete verification of every figure.

• Scope: An auditor carries out extensive testing of transactions. An independent examiner looks for obvious errors or misleading information.
• Cost and time: An audit is typically more expensive and time-consuming. An independent examination costs less and is quicker to arrange.
• Level of assurance: An audit provides a higher level of assurance on the correctness of the accounts, whereas an independent examination focuses on whether anything appears wrong or inconsistent.

Who can carry it out?

Your charity’s independent examination should be carried out by a person with the right level of knowledge and experience. If your charity’s income is less than £250,000, you don’t need an examiner with a professional qualification. But if your income is above £250,000, you need someone like us who’s a member of a professional body, such as the Institute of Chartered Accountants in England and Wales (ICAEW). Make sure your examiner is genuinely independent. That means they can’t be closely involved with your charity’s finances or governance.

If you’re not sure who’s eligible, HMRC guidance on charity compliance is a good place to start. You can also contact us at PB Syddall & Co if you need someone to help with your independent examination.

What charities need to prepare

Organised record-keeping is key. Good record-keeping makes the independent examination smoother and faster. Here are the steps to take.

1. Maintain clear records
   Keep all receipts, invoices, bank statements and details of donations. A well-structured system can save you time when the examination starts.
2. Complete a trial balance
   A trial balance is a summary of all ledger balances. It helps your examiner see, at a glance, whether your accounts are in order.
3. Review financial statements
   Check if your financial statements match your trial balance and supporting documents. If something looks off, fix it before you hand your records over.
4. Gather trustee reports
   The examiner will also look for any reference to financial matters in trustee reports. Make sure those are finalised and consistent with the accounts.
5. Have policies and procedures to hand
   Your examiner may want to see certain written policies, especially if they relate to significant income or spending in your accounts.

Benefits of good financial scrutiny

Independent examinations for charities help you stay on track with your finances. They make trustees more aware of their responsibilities and help you spot potential weaknesses in your record-keeping. Here are some of the main benefits.

• Trust and credibility: If potential donors see that your accounts have been independently examined, they’re more likely to trust your charity’s financial decisions.
• Better decision-making: Clean records and oversight allow trustees to make decisions backed by factual data.
• Legal compliance: You avoid the risk of fines or sanctions. The Charity Commission can take action if it believes charities aren’t meeting the required reporting standards. According to the ONS, around 80% of individuals who donate to charity each year say transparency is a key factor in their support.

Thresholds and reporting obligations

To recap, under current rules, if your charity’s income is:

• £25,000 or less you probably just need simpler receipts and payments accounts, although you can opt for an independent examination if you want.
• over £25,000 but under £1m you’ll need an independent examination, unless specific conditions trigger a full audit.
• over £1m you must have an audit.

Make sure you know these thresholds for the 2025/26 tax year and stay updated with any changes. You can also check out the Companies House guidance for charitable companies if your organisation is set up as a charitable company.

The examination process at a glance

1. Initial discussion: You and the examiner agree on the scope of the work and the timeframe.
2. Information gathering: You hand over financial statements and supporting documents.
3. Checks and review: The examiner compares the statements to the records and looks for inconsistencies or errors.
4. Report: The examiner issues a report stating whether any material matters have come to their attention. If all is well, you’ll have a clean report.

Next steps and final thoughts

Whether you’re a small charity or one that’s growing quickly, independent examinations for charities can offer a cost-effective level of oversight. The process is less rigorous than a full audit, but it’s still detailed enough to protect the interests of your beneficiaries. By making sure your records are solid, you’ll present a credible image to funders, attract more supporters and keep trustees comfortable about what’s going on behind the scenes.

At PB Syddall & Co we handle independent examinations for charities of all sizes. And we’re always ready to advise on whether you need to upgrade to an audit (which we can also handle for you).

Your charity’s financial health is too important to leave to guesswork. An independent examination helps you prove that your accounts stand up to scrutiny and follow the guidelines laid out by the Charity Commission. It’s good practice that keeps your charity on the right side of compliance and trust.

Ready to talk about independent examinations for charities? We’d be happy to chat about how our services could help you stay compliant in the 2025/26 tax year and beyond. Get in touch today.