ICAEW pushes for charity audit threshold consultation

March 28, 2024

ICAEW has urged the UK government to push forward on a proposed consultation that could see the audit thresholds for charities increased and reduce the administrative burden for hundreds of organisations in the third sector.

Charity audit thresholds were last updated nine years ago, following a consultation in 2015. Currently, audits are required by charities with a gross annual income exceeding £1m, or gross annual income exceeding £250,000 and year end aggregate value of assets exceeding £3.26m.

In a letter addressed to UK minister for civil society, Stuart Andrew, ICAEW chief executive, Michael Izza, said recent inflation was dragging many smaller charities towards current audit thresholds, an effect he described as “disproportionate” especially given the other financial pressures they faced. “ICAEW would like to see this consultation taken forward before the end of this Parliament,” Izza said.

Growing demand and sustained financial challenges are leading half of charities to say they are at full capacity and cannot help anyone else, according to research from the Charities Aid Foundation (CAF) published in January, with one in seven saying they are having to turn away people in need.

Nearly two-thirds of charities say they are having to do more with less compared to a year ago, two-fifths are using their reserves to meet operational costs and a similar amount (38%) are asking funders for help with increased costs, the CAF research found.

ICAEW also believes that a consultation on the audit threshold would support the need for proportionate and effective regulation in line with the Charity Commission’s recently published strategy for 2024-2029.

[The Accountant Online]