CHARITY
1 Responsibilities of auditors and trustees – Charity audit assignments only
1.1 Our function as auditors under section 43 of the Charities Act 1993 is to examine the financial statements of the charity presented to us by yourselves in your capacity as trustees. We have a statutory responsibility and professional duty to report whether in our opinion the financial statements give a true and fair view of the state of the charity’s affairs at the end of the year, and of its incoming resources and application of resources for the year and adequately distinguish any material special trust or other restricted fund. In arriving at our opinion, we are required to consider the following matters, and to report on any in respect of which we are not satisfied:
(a) whether proper accounting records have been kept by the charity in accordance with section 41 of the Charities Act 1993;
(d) whether the financial statements are in agreement with the accounting records;
(e) whether we have obtained all the information and explanations which we consider necessary for the purposes of our audit;
Under the Charities (Accounts and Reports) Regulations 2000 you are required to report as to whether you have given consideration to the major risks to which the charity is exposed, and to the systems designed to mitigate those risks. Compliance with the Charities SORP requires you to confirm that these risks have been reviewed and that systems have been established to mitigate those risks. We are not required to audit this statement, or to form an opinion on the effectiveness of the risk management and control procedures.
We have a statutory duty to report to the Charity Commissioners such matters (concerning the activities or affairs of the charity or any connected institution or body corporate) of which we become aware during the course of our audit which are (or are likely to be) of material significance to the Commissioners in the exercise of their powers of inquiry into, or acting for the protection of, charities (Regulation 6 (5) The Charities (Accounts and Reports) Regulations 1995).
We have a professional responsibility to report if the financial statements do not comply in any material respect with applicable accounting standards, unless in our opinion the non-compliance is justified in the circumstances. In determining whether or not the departure is justified, we consider:
whether the departure is required in order for the financial statements to give a true and fair view; and whether adequate disclosure has been made concerning the departure.
1.2 Our professional responsibilities also include:
• incorporating in our report a description of the trustees’ responsibilities for the financial statements where the financial statements or the accompanying information do not include such a description; and
• considering whether other information in documents contained in audited financial statements, particularly the trustees’ report, is consistent with those financial statements.
1.3 As auditors we are not responsible for the preparation of the financial statements nor for the maintenance of the accounting records of the charity, which duties fall on yourselves as trustees. You are also responsible for making available to us, as and when required, all the charity’s accounting records and all other relevant records and related information, including minutes of all trustee and sub-committee meetings.
As trustees of a charity you are responsible for preparing financial statements which give a true and fair view of the incoming resources in the year and statement of affairs at the end of the year, and adequately distinguish any material special trust or other restricted fund and which have been prepared in accordance with the Charities Act 1993 and regulations thereunder.
As trustees, you are also under a duty to prepare an annual report for each financial year which complies in its form and contents with regulations made under the Charities Act 1993. You are also required to have regard to the Statement of Recommended Practice Accounting by Charities issued in October 2000 by the Charity Commissioners for England & Wales.
2 Scope of Audit
2.5 Our audit will be conducted in accordance with the Auditing Standards issued by the Auditing Practices Board, and will include such tests of transactions and of the existence, ownership and valuation of assets and liabilities, as we consider necessary.
Our audit work will include such other procedures as considered necessary for the purposes of the report having regard to APB Practice Note 11 The Audit of Charities.
2.6 We shall obtain an understanding of the accounting system and internal control systems in order to assess their adequacy as a basis for the preparation of the financial statements and to establish whether proper accounting records have been maintained by the charity. We shall expect to obtain such appropriate evidence, as we consider sufficient to enable us to draw reasonable conclusions there from.
2.7 The nature and extent of our procedures will vary according to our assessment of the company’s accounting system and, where we wish to place reliance on it, the internal control system, and may cover any aspect of the business operations that we consider appropriate. Our audit is not designed to identify all significant weaknesses in the company’s systems but, if such weaknesses come to our notice during the course of our audit which we think should be brought to your attention, we shall report them to you. Any such report may not be provided to third parties without our prior written consent. Such consent will be granted only on the basis that such reports are not prepared with the interests of anyone other than the company in mind and that we accept no duty or responsibility to any other party as concerns the reports.
2.8 As part of our normal audit procedures, we may request you to provide written confirmation of certain oral representations which we have received from you during the course of the audit on matters having material effect in the financial statements.
2.5 In order to assist us with the examination of your financial statements, we shall request sight of all documents or statements which are due to be issued with the financial statements. We are also entitled to attend all general meetings of the charity and to receive notice of all such meetings.
2.6 The responsibility for safeguarding the assets of the charity and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with yourselves. However, we shall endeavour to plan our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements or accounting records (including those resulting from fraud, error or non-compliance with law or regulations), but our examination should not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance which may exist.
2.7 We shall not be treated as having notice, for the purposes of our audit responsibilities, of information provided to members of our firm other than those engaged on the audit (for example information provided in connection with accounting, taxation and other services).
2.8 Once we have issued our report we have no further direct responsibility In relation to the financial statements for that financial year. However, we expect that you will inform us of any material event occurring between the date of our report and that of the annual general meeting which may affect the financial statements.
2.9 We also have a statutory duty to report to the Charity Commissioners such matters (concerning the activities or affairs of the charity or any connected institution or body corporate) of which we become aware during the course of our audit which are (or are likely to be) of material significance to the Commissioners in the exercise of their powers of enquiry into, or acting for the protection of charities (Regulation 6(5) The Charities (Accounts and Reports) Regulations 1995).
Where audited information is published on the charity’s website or by other electronic means, it is your responsibility to advise us of any intended electronic publication before it occurs and to ensure that any such publication properly presents the financial information and auditor’s report. We reserve the right to withhold consent to the electronic publication of our report if, in our opinion, it or the financial statements are to be published in an inappropriate manner
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1 Responsibilities of accountants – Incorporated charity compilation report only
1.1 You have asked us to assist you in the preparation of the financial statements. Based on the accounting records maintained by you and the information and explanations given to us by you, we shall compile draft accounts for your approval. We shall then issue signed annual financial statements including our Total Exemption Report. Unless otherwise agreed in writing we shall plan our work on the basis that no report is required by statute or regulation for the year. In carrying out our engagement we will make enquiries of management and undertake any procedures that we judge appropriate, but are under no obligation to perform procedures that may be required for assurance engagements – such as audits or reviews.
1.2 You have advised us that the charitable company is exempt from an audit of the financial statements. We will not carry out any work to determine whether or not the charitable company is entitled to audit exemption. However, should our work indicate that the charitable company is not entitled to the exemption, we will inform you of this.
1.3 Our work will not be an audit of the accounts in accordance with Auditing Standards. Accordingly, we will not obtain any evidence relating to the validity of the entries in the accounting records, or to the accounts or to the disclosures in the accounts. Nor will we make any assessment of the estimates and judgements made by you in the preparation of the accounts. Consequently our work will not provide any assurance that the accounting records or the accounts are free from material misstatement, whether caused by fraud, or other irregularities or error and cannot be relied on to identify weaknesses in internal controls.
1.4 Since we have not carried out an audit, nor confirmed in any way the accuracy or reasonableness of the accounting records maintained by the charitable company, we are unable to provide any assurance as to whether the financial statements that we prepare from those records present a true and fair view.
1.5 In addition, we have no responsibility to determine whether you have maintained proper accounting records in accordance with section 221 of the Act and we will not address this point unless you specifically request us in writing to do so.
1.6 We have a professional duty to compile financial statements that conform with generally accepted accounting principles from the accounting records and information and explanations given to us. Further, as trustees of a limited charitable company, you have a duty to prepare accounts that comply with the Companies Act 1985 and applicable accounting standards. In addition, as trustees of a charitable company you are also required to have regard to the Statement of Recommended Practice ‘Accounting and Reporting by Charities (Revised 2005)’, you should follow that statement in sofar as compliance does not contradict any requirement of the Companies Act 1985 by supplementing the requirements of that Act. Where we identify that the financial statements do not conform to accepted accounting principles or if the accounting policies adopted are not immediately apparent, this will be made clear in our report, if it is not clear in the financial statements.
1.7 As part of our normal procedures we may request you to provide written confirmation of any information or explanations given to us orally during the course of our work.
1.8 We shall report, with any modifications that we consider may be necessary, that in accordance with this engagement letter and in order to assist you to fulfil your responsibilities, we have complied, without carrying out an audit, the financial statements from the accounting records of the charitable company and from information and explanations supplied to us.
2 Responsibility of trustees
2.1 As trustees of the charitable company you are responsible for ensuring that the charitable company maintains proper accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and for preparing financial statements which give a true and fair view and which have been prepared in accordance with the Companies Act 1985 (the Act).
2.2 In preparing the financial statements, you are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable and prudent; and
• Prepare the accounts on the going concern basis unless it is inappropriate to presume that the charitable company will continue in operation.
• Have regard to the Statement of Recommended Practice ‘Accounting and Reporting by Charities (Revised 2005)’, published by the Charity Commissioners for England and Wales.
2.3 You are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
2.4 You are responsible for determining whether, in respect of the year, the charitable company meets the conditions for exemption from an audit set out in section 249A of the Act, namely that:
• It qualifies as a small charitable company in relation to that year for the purposes of section 247;
• Its turnover in that year is not more than £90,000; and
• Its balance sheet total for the year is not more than £1.4 million.
2.5 You are responsible for determining whether, in respect of the year, the exemption is not available for any of the reasons set out in section 249B of the Act; these include the following:
That at no time during the year was the charitable company:
• A public charitable company;
• An authorised person or an appointed representative under the Financial Services and Markets Act 2000;
• A member of a group that exceeded the group exemption limits.
2.6 You should be aware that the exemption from audit is available only if you, as trustees, sign a declaration on the balance sheet stating that:
• For the year in question, the charitable company is eligible to take advantage of the audit exemptions;
• That no member or members holding 10 per cent or more of the issued share capital have requisitioned an audit; and
• You acknowledge your obligations to keep proper accounting records and to prepare accounts which give a true and fair view of the state of the charitable company’s affairs and of its profit or loss for the period.
2.7 You are responsible for ensuring that the charitable company complies with laws and regulations applicable to its activities, and for establishing arrangements designed to prevent any non-compliance with laws and regulations and to detect any that may occur.
2.8 You have undertaken to make available to us, as and when required, all the charitable company’s accounting records and related financial information, including minutes of management and shareholders’ meetings, necessary to carry out our work. You will make full disclosure to us of all relevant information.
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1 Responsibilities of accountants – Totally exempt charity only
1.1 You have asked us to assist you in the preparation of the financial statements. Based on the accounting records maintained by you and the information and explanations given to us by you, we shall compile draft accounts for your approval. We shall then issue signed annual financial statements including our Total Exemption Report. Unless otherwise agreed in writing we shall plan our work on the basis that no report is required by statute or regulation for the year. In carrying out our engagement we will make enquiries of management and undertake any procedures that we judge appropriate, but are under no obligation to perform procedures that may be required for assurance engagements – such as audits or reviews.
1.2 You have advised us that the charitable company is exempt from an audit of the financial statements. We will not carry out any work to determine whether or not the charitable company is entitled to audit exemption. However, should our work indicate that the charitable company is not entitled to the exemption, we will inform you of this.
1.3 Our work will not be an audit of the accounts in accordance with Auditing Standards. Accordingly, we will not obtain any evidence relating to the validity of the entries in the accounting records, or to the accounts or to the disclosures in the accounts. Nor will we make any assessment of the estimates and judgements made by you in the preparation of the accounts. Consequently our work will not provide any assurance that the accounting records or the accounts are free from material misstatement, whether caused by fraud, or other irregularities or error and cannot be relied on to identify weaknesses in internal controls.
1.4 Since we have not carried out an audit, nor confirmed in any way the accuracy or reasonableness of the accounting records maintained by the charitable company, we are unable to provide any assurance as to whether the financial statements that we prepare from those records present a true and fair view.
1.5 In addition, we have no responsibility to determine whether you have maintained proper accounting records in accordance with section 221 of the Act and we will not address this point unless you specifically request us in writing to do so.
1.6 We have a professional duty to compile financial statements that conform with generally accepted accounting principles from the accounting records and information and explanations given to us. Further, as trustees of a limited charitable company, you have a duty to prepare accounts that comply with the Companies Act 1985 and applicable accounting standards. In addition, as trustees of a charitable company you are also required to have regard to the Statement of Recommended Practice ‘Accounting and Reporting by Charities (Revised 2005)’, you should follow that statement in sofar as compliance does not contradict any requirement of the Companies Act 1985 by supplementing the requirements of that Act. Where we identify that the financial statements do not conform to accepted accounting principles or if the accounting policies adopted are not immediately apparent, this will be made clear in our report, if it is not clear in the financial statements.
1.7 As part of our normal procedures we may request you to provide written confirmation of any information or explanations given to us orally during the course of our work.
1.8 We shall report, with any modifications that we consider may be necessary, that in accordance with this engagement letter and in order to assist you to fulfil your responsibilities, we have complied, without carrying out an audit, the financial statements from the accounting records of the charitable company and from information and explanations supplied to us.
2 Responsibility of trustees
2.1 As trustees of the charitable company you are responsible for ensuring that the charitable company maintains proper accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and for preparing financial statements which give a true and fair view and which have been prepared in accordance with the Companies Act 1985 (the Act).
2.2 In preparing the financial statements, you are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable and prudent; and
• Prepare the accounts on the going concern basis unless it is inappropriate to presume that the charitable company will continue in operation.
• Have regard to the Statement of Recommended Practice ‘Accounting and Reporting by Charities (Revised 2005)’, published by the Charity Commissioners for England and Wales.
2.3 You are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities
2.4 You are responsible for determining whether, in respect of the year, the charitable company meets the conditions for exemption from an audit set out in section 249A of the Act, namely that:
• It qualifies as a small charitable company in relation to that year for the purposes of section 247;
• Its turnover in that year is not more than £90,000; and
• Its balance sheet total for the year is not more than £1.4 million.
2.5 You are responsible for determining whether, in respect of the year, the exemption is not available for any of the reasons set out in section 249B of the Act; these include the following:
That at no time during the year was the charitable company:
• A public charitable company;
• An authorised person or an appointed representative under the Financial Services and Markets Act 2000;
• A member of a group that exceeded the group exemption limits.
2.6 You should be aware that the exemption from audit is available only if you, as trustees, sign a declaration on the balance sheet stating that:
• For the year in question, the charitable company is eligible to take advantage of the audit exemptions;
• That no member or members holding 10 per cent or more of the issued share capital have requisitioned an audit; and
• You acknowledge your obligations to keep proper accounting records and to prepare accounts which give a true and fair view of the state of the charitable company’s affairs and of its profit or loss for the period.
2.7 You are responsible for ensuring that the charitable company complies with laws and regulations applicable to its activities, and for establishing arrangements designed to prevent any non-compliance with laws and regulations and to detect any that may occur.
2.8 You have undertaken to make available to us, as and when required, all the charitable company’s accounting records and related financial information, including minutes of management and shareholders’ meetings, necessary to carry out our work. You will make full disclosure to us of all relevant information
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1 Responsibilities of independent examiners and trustees – Unincorporated charity only
1.1 We shall plan our work on the basis that an independent examiners’ report is required for the year, unless you inform us in writing that either:
a) the charity requires and audit of the financial statements; or
b) the charity requires neither an audit nor an independent examiners’ report.
1.2 Should you instruct us to carry out an audit, then the terms of that assignment will be dealt with in a new engagement letter. Should you inform us that the charity requires neither an audit nor an independent examiners’ report, then we shall have no responsibilities to the charity, except those specifically agreed upon between us in respect of other professional services.
1.3 As independent examiners, we have a statutory responsibility to report to the members of the charity whether, in our opinion, there is reasonable cause to believe that, in any material respect:
(a) proper accounting records have not been kept by the charity, contrary to the requirements of section 41 of the Charities Act 1993;
(f) the financial statements do not agree with the accounting records;
(g) the financial statements do not comply with any of the accounting requirements specified in regulation 3 of the Charities (Accounts and Reports) Regulations 2005, except to the extent necessary to show a true and fair view.
Should our work indicate that the charity is not entitled to exemption from an audit of the financial statements, then we will inform you of this. In such circumstances, we will not issue any report and will withdraw from the engagement to prepare an independent examiners’ report, notifying you in writing of the reasons. In these circumstances, if appropriate, we will discuss with you the possibility of appointing us as auditors.
We have a professional responsibility to report if the financial statements do not comply in any material respect with applicable accounting standards, unless in our opinion the non-compliance is justified in the circumstances. In determining whether or not the departure is justified, we consider:
a) whether the departure is required in order for the financial statements to give a true and fair view; and
b) whether adequate disclosure has been made concerning the departure.
1.4 As independent examiners we are not responsible for the preparation of the financial statements nor for the maintenance of the accounting records of the charity, which duties fall on yourselves as the trustees. You are also responsible for making available to us, as and when required, all the charity’s accounting records and all other relevant records and related information, including minutes of all trustees and sub-committee meetings.
1.5 As the governing body of a charity you are responsible for preparing financial statements which give a true and fair view of the incoming resources in the year and statement of affairs at the end of the year, and adequately distinguish any material special trust or other restricted fund and which have been prepared in accordance with the Charities Act 1993 and regulations thereunder. In preparing those financial statements, you are required to:
a) select suitable accounting policies and then apply them consistently;
b) make judgements and estimates that are reasonable and prudent; and
c) prepare the financial statements on the going concern basis unless it is inappropriate to assume that the activities of the charity will continue.
1.6 As the governing body, you are also under a duty to prepare an annual report for each financial year which complies in its form and contents with regulations made under the Charities Act 1993. You are also required to have regard to the Statement of Recommended Practice Accounting by Charities issued in 2005 by the Charity Commissioners for England & Wales.
1.7 You are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the charity and to enable them to ensure that the financial statements comply with the Charities Statement of Recommended Practice ‘Accounting and Reporting by Charities’ (revised 2005), published by the Charity Commissioners for England and Wales.
1.8 You are also responsible for determining whether, in respect of the year, the charity meets the conditions for exemption from an audit set out in section 43 of the Charities Act 1993, namely that:
a) the charity’s gross income or total expenditure in the current year is more than £10,000, but not more than £250,000 in the current year nor either of the two preceding years; and
b) no notice has been received from the Charity Commissioners requiring an audit.
1.9 If, in respect of the year, the charity satisfies the above criteria, the availability of the exemption from an audit of the financial statements is conditional upon your causing an independent examiners’ report to be prepared in respect of the financial statements in accordance with section 45 of the Charities Act 1993. You are responsible for deciding whether that report shall be made and for appointing us as reporting accountants to make that report to the governing body of the charity.
2 Scope of Independent Examination
2.1 Our function as independent examiners will be carried out in accordance with guidance for such engagements issued by the Charity Commission. It will consist of comparing the financial statements with the accounting records kept by the charity, and making such limited enquiries of the trustees and staff of the charity as we may consider necessary for the purposes of our report.
2.2 Our work as reporting accountants will not be an audit of the financial statements in accordance with Auditing Standards. Accordingly, we will not obtain any independent evidence relating to entries in the accounting records, or to the amounts or disclosures in the financial statements. Consequently our work as reporting accountants will not provide any assurance that the accounting records or the financial statements are free from material misstatement whether caused by fraud, other irregularity or error.
2.3 As part of our normal procedures, we may request you to provide written confirmation of certain oral representations which we have received from you during the course of the independent examination on matters having material effect in the financial statements.
Because we will not carry out an audit, not otherwise confirm the accuracy or reasonableness of the accounting records maintained by the charity, we will be unable to provide any assurance as to whether the financial statements that we prepare from those records give a true and fair view