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External Scrutiny of Accounts

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External Scrutiny of your group’s Annual Accounts usually refers to having someone independent and/or suitably qualified to look over the accounts. How detailed that scrutiny is will depend on your structure, charitable status, income, the type of Accounts you prepare and/or your constitution or any decision from your group’s committee or board.

If your group or organisation has charitable status (or if your group’s constitution sets out a particular requirement) at least some level of external scrutiny of your Annual Accounts is mandatory.

External Scrutiny of Accounts for Incorporated organisations 

If your group is incorporated (for example a Company Ltd by Guaratee or Community Interest Company) the usual external scrutiny requirement would be for an audit of the accounts. However, most incorporated community groups/organisations are relatively small and therefore likely to be exempt from a requirement to have their Annual Accounts audited.

To qualify for audit exemption, your group must:-

  • qualify as small
  • have a turnover of less than £6.5 million
  • have a balance sheet total of less than £3.26 million

Your group or organisation will be classed as ‘small’ (in Company Law) if it meets at least two of the following conditions:-

  • annual turnover less than £6.5 million
  • balance less than £3.26 million
  • no more than 50 employees

Even if your group is exempt from audit requirements under Company Law you would still be required to have your Annual Accounts audited if there is a requirement in your constitution to do so, or if the Directors make a decision to do so.

External Scrutiny of Charity Accounts 

The format and requirements for Annual Accounts prepared by registered charities in Scotland are set out in the Charity and Trustees Investment (Scotland) Act regulated by the Office of the Scottish Charity Register (OSCR). As part of this regulation, all charities are required to have their Annual Accounts externally scrutinized, either by:-

  • Independent Examination or
  • Audit

The appropriate type of scrutiny will depend on:-

  • the charity’s gross annual income
  • whether your group is unincorporated or incorporated
  • the type of accounts prepared (that is Receipts and Payments or Fully Accrued)
  • what the charity’s own governing document says
  • any Act of Parliament
  • any decision by the Trustees

Contact the Community Toolkit Editor

Conditions of Use
Last Updated 14/10/2011 15:17

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Contact the Community Toolkit Editor

Conditions of Use
Last Updated 14/10/2011 15:17

_uacct = “UA-829849-2″;urchinTracker();

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