CHARITY (updated July 2009)
Charity audit assignments only requiring an audit under the Companies Act 1985 and for accounting periods commencing before 6 April 2008.
1 Responsibilities of auditors and trustees
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;
(b) whether the financial statements are in agreement with the accounting records;
(c) 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.
Charity audit assignments only requiring an audit under the Companies Act 2006 and for accounting periods commencing on or after 6 April 2008.
1 Your responsibilities as directors/trustees
1.1 As directors/trustees of the charitable company, you are required to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the charitable company and of the profit or loss of the charitable company for that period. 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 presume that the charitable company will continue in business.
1.2 In addition to complying with companies’ legislation, you are also required to have regard to the Statement of Recommended Practice, Accounting and Reporting by Charities (Revised 2005) (the SORP), published by the Charity Commissioners for England and Wales. You should follow that statement insofar as compliance with it does not contradict any requirement of the Companies Act 2006 by supplementing the requirements of that Act.
1.3 You are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and to enable them to ensure that the financial statements comply with the SORP and the Companies Act 2006 (the Act).
1.4 You are responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps to ensure the charitable company’s activities are conducted honestly and for the prevention and detection of fraud and other irregularities.
1.5 In addition to the general duties of directors specified in sections 170 to 177 of the Act 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 occur.
1.6 Section 417 of the Act requires the directors/ trustees to include in their report a business review containing a fair review of the charitable company’s business, and a description of the principal risks and uncertainties facing the charitable company. In addition, compliance with the SORP requires you to confirm that the major risks to which the charitable company is exposed 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.
1.7 You have agreed to make available to us, as and when required, all the charitable companies accounting records and related financial information, including minutes of board*/committee of management*/trustees*/governors meetings necessary to carry out our work. You are required to confirm in the directors’ [trustees’] report that so far as you are aware, there is no relevant audit information of which we, the company’s auditors, are unaware and that you have taken all the steps that you ought to take as directors in order to make yourselves aware of any relevant audit information and to establish that we are aware of that information.
1.8 Where audited information is published on the charitable company’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 it or the financial statements are to be published in an inappropriate manner.
1.9 It is your responsibility to ensure there are controls in place to prevent or detect quickly any changes to that information. We are neither required to review such controls nor to carry out ongoing reviews of the information after it is first published. The maintenance and integrity of the charitable company’s website is your responsibility and we accept no responsibility for changes made to audited information after it is first posted.
2 Our responsibilities as auditors
2.1 Our legal and professional duty is to make a report to the members stating whether, in our opinion:
- the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the charitable company’s affairs as at [insert date] and of its incoming resources and application of resources in that year; and
- the financial statements have been prepared properly in accordance with the Companies Act 2006.
- the information given in the directors’ [trustees’] report is consistent with the financial statements.
In arriving at our opinion we are required by law to consider the following matters, and to report on any in respect of which we are not satisfied:
(a) whether adequate accounting records have been kept by the charitable company and proper returns adequate for our audit have been received from branches not visited by us;
(b) whether the charitable company’s balance sheet and profit and loss account are in agreement with the accounting records and returns;
(c) whether we have obtained all the information and explanations which we think necessary for the purpose of our audit;
(d) whether the requirements concerning the disclosure of directors’ benefits, remuneration, pensions and compensation for loss of office are complied with; and
(e) where the charitable company has prepared accounts in accordance with the small company regime: whether it is entitled to do so.
2.2 As noted above, our report will be made solely to the charitable company’s members, as a body, in accordance with Section 495 of the Act. Our audit work will be undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. In those circumstances, to the fullest extent permitted by law, we will not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body, for our audit work, for the audit report, or for the opinions we form.
2.3 There are certain other matters, which according to the circumstances, may need to be dealt with in our report. For example, where the financial statements do not give details of trustees’ remuneration or of their transactions with the charitable company, the Act requires us to disclose such matters in our report.
2.4 Under section 44A(2) of the Charities Act 1993, for accounting periods commencing on or after 1 April 2008, we have a statutory duty to make a written report to the Charity Commission on such matters (which relates to the activities or affairs of the charity or of any connected institution or body) of which we become aware during the course of our audit and which we have reasonable cause to believe is likely to be of material significance for the purposes of the exercise by the Commission of its functions under section 8 or 18 of the Charities Act 1993. In addition under section 44A(3) if we become aware of any matter which does not require to be reported under section 44A(2) but which we have reasonable cause to believe is likely to be relevant for the purposes of the exercise by the Charity Commission of any of its functions then we may make a report on the matter to the Commission. We may have to make this report without your knowledge and consent and we cannot undertake to you to fetter this discretion in any manner.
2.5 In addition, we have a professional duty to report if the financial statements do not comply in any material respect with the SORP, Financial Reporting Standards or Statements of Standard Accounting Practice, unless in our opinion non-compliance is justified in the circumstances. In determining whether or not any departure is justified we will 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.
2.6 Our professional duties also include:
(a) incorporating in our report a description of the trustees’ responsibilities for the financial statements, where the financial statements or accompanying information do not include such description; and
(b) considering whether other information in documentation containing the financial statements is consistent with the audited financial statements.
3 Scope of audit
3.1 Our auditing procedures will be carried out in accordance with the International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the trustees, as well as evaluating the overall financial statement presentation. Because of the test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements may remain undiscovered.
3.2 We will obtain an understanding of the accounting and internal control systems in order to assess their adequacy as a basis for the preparation of the financial statements and to establish whether the charitable company has maintained proper accounting records. We will need to obtain relevant and reliable evidence sufficient to enable us to draw reasonable conclusions therefrom.
3.3 The nature and extent of our tests will vary according to our assessment of the charitable company’s accounting and internal control systems, and may cover any aspects of the business’s operations. We shall report to the management any significant weaknesses in, or observations on, the charitable company’s systems that come to our attention of which we believe the trustees should be made aware. Any such report may not be provided to any third party without our prior written consent. Such consent will only be granted on the basis that such reports are not prepared with the interests of any party other than the members in mind and that we therefore neither have nor accept any duty or responsibility to any other party as concerns the reports.
3.4 The responsibility for safeguarding the assets of the charitable company and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with the management. However, we will plan our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities, fraud 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 that might exist.
3.5 As part of our normal audit procedures, we may request you to provide formal representations concerning certain information and explanations we receive from you during the course of our audit. In particular, where we bring to your attention misstatements in the financial statements that are not adjusted, we shall require written representation of your reasons. In connection with representations and the supply of information to us generally, we draw your attention to section 501 of the Act under which it is an offence for an officer of the charitable company to mislead the auditors.
3.6 To enable us to conduct a review of your financial statements, which constitutes part of our audit, we will request sight of any documents or statements, which will be issued with the financial statements.
3.7 Once we have issued our report we will 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. We are entitled to attend all general meetings of the charitable company, and to receive notice of all such meetings.
And if applicable
3.8 We appreciate that the present size of your operation renders it uneconomic to create a system of internal control based on the segregation of duties for different functions within each area of the operation. In the running of your charitable company we understand that the trustees are closely involved with the control of the charitable company’s transactions. In planning and performing our audit work we shall take account of this supervision.
4 Communication
4.1 In order to ensure that there is effective two-way communication between us we set out below the expected form and timing of such communications.
We shall contact you by telephone prior to each year-end for preliminary discussions concerning the audit. We will confirm in writing the matters discussed and any agreed action.
We will discuss the forthcoming audit prior to the expected start date. Again we will confirm in writing the matters discussed and any agreed action.
We will arrange a meeting to discuss any matters arising from the audit after completion of the detailed work. Again we will confirm in writing the matters discussed and any agreed action.
4.2 The formal communications set out above are the minimum required to comply with auditing standards. We shall of course contact you on a more frequent and regular basis regarding both audit and other matters.
Incorporated charity compilation report only for accounting periods beginning before 6 April 2008
1 Responsibilities of accountants
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 insofar 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.
Independent examination - charitable company that is exempt from audit under the Companies Act 2006 but which requires an independent examination under the Charities Act 1993. This letter applies for periods commencing on or after 1 April 2008.
Note. References to the Companies Act 2006 should be replaced with the Companies Act 1985 for periods that commence on or after 1 April 2008 but before 6 April 2008.
1 Your responsibilities as trustees
1.1 As directors/trustees of the charitable company, you are required to prepare financial statements for each financial year that give a true and fair view and have been prepared in accordance with applicable accounting standards and the Companies Act 2006. 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 presume that the charitable company will continue in business.
1.2 As trustees of the charitable company, you have a duty under the Companies Act 2006 to prepare a directors' report for each financial year and also an annual report complying in its form and content with regulations made under the Charities Act 1993. You should also have regard to the Statement of Recommended Practice 'Accounting and Reporting by Charities (revised 2005)' ("SORP"), issued by the Charity Commission for England & Wales and any subsequent amendments or variations to this statement.
1.3 You are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and to enable them to ensure that the financial statements comply with the SORP and the Companies Act 2006 (the Act).
1.4 You are responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps to ensure the charitable company’s activities are conducted honestly and for the prevention and detection of fraud and other irregularities.
1.5 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 the Charities Act 1993 and the Companies Act 2006, namely that:
(a) no notice has been received from the Charity Commission requiring an audit;
(b) no notice has been received from the members requiring an audit;
(c) the charity’s gross income in the current year is not more than £500,000;
(d) the charity’s gross assets do not exceed £2.8 million; and
(e) the charity is not ineligible for audit exemption under the Companies Act 2006 (a plc, bank insurance company, etc or a member of a group containing such a company).
1.6 The exemption from audit is available only if you, as director/trustees, sign a declaration on the balance sheet stating that:
- for the year in question, the company is eligible to take advantage of the audit exemptions;
- the members have not required the company to obtain an audit of its financial statements for the year in accordance with section 249B(2) of the Companies Act 1985; and
- you acknowledge your obligations to keep proper accounting records and to prepare financial statements which give a true and fair view of the state of the company’s affairs and of its profit or loss for the period.
1.7 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 trustees of the charity.
1.8 If gross income falls to £10,000 or less for the year, then, provided the other criteria set out above are met, you will need neither an audit nor an independent examiner’s report.
1.9 You have undertaken to make available to us, as and when required, all the charity’s accounting records and related financial information, including minutes of management and members’ meetings, necessary to carry out our work. You will make full disclosure to us of all relevant information.
2 Our responsibilities as accountants
2.1 We shall plan our work on the basis that an independent examiner’s report is required for the year, unless you inform us in writing that either:
(a) the charity requires an audit of the financial statements; or
(b) the charity requires neither an audit nor an independent examiner’s report.
2.2 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 examiner’s report, then we shall have no responsibilities to the charity, except those specifically agreed upon between us in respect of other professional services.
2.3 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) accounting records have not been kept, contrary to the requirements of the Companies Act 2006;
(b) the financial statements do not agree with those accounting records;
(c) the financial statements do not comply with any of the accounting requirements specified in regulation 4 (or 5 for common investment funds or common deposit funds)* of the Charities (Accounts and Reports) Regulations 2008, except to the extent necessary to show a true and fair view.
2.4 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 examiner’s 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.
2.5 We have a professional responsibility not to allow our name to be associated with financial statements that are, or may be, misleading. Therefore, although we are not required to search for such matters, should we become aware, for any reason, that the financial statements are, or may be, misleading; if the matter cannot be adequately dealt with by means of qualifying our opinion (or by other appropriate modifications of the report), we will not issue any report. In such circumstances, we will withdraw from the engagement, and will notify you in writing of the reasons.
2.6 Under section 44A(2) of the Charities Act 1993 we have a statutory duty to make a written report to the Charity Commission on such matters (which relates to the activities or affairs of the charity or of any connected institution or body) of which we become aware during the course of our examination and which we have reasonable cause to believe is likely to be of material significance for the purposes of the exercise by the Commission of its functions under section 8 or 18 of the Charities Act 1993. In addition under section 44A(3) if we become aware of any matter which does not require to be reported under section 44A(2) but which we have reasonable cause to believe is likely to be relevant for the purposes of the exercise by the Charity Commission of any of its functions then we may make a report on the matter to the Commission. We may have to make this report without your knowledge and consent and we cannot undertake to you to fetter this discretion in any manner.
3 Scope of work
3.1 Our work 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 purpose of our report.
3.2 As part of our normal procedures, we may request you to provide written confirmation of any information or explanations provided by you orally during the course of our work.
3.3 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.
3.4 Because we will not carry out an audit, nor 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.
Unincorporated charity only. The Charities (Accounts and Reports) Regulations 2008 apply for periods commencing 1 April 2008
1 Your responsibilities as trustees
1.1 As trustees of the charity, you are responsible for ensuring that the charity maintains proper accounting records and an appropriate system of internal control. You are also responsible for preparing financial statements that give a true and fair view of the state of affairs of the charity at the end of the financial year and of the incoming resources and application of the resources of the charity in that year in accordance with the Charities Act 1993 and regulations there under. You are also responsible for making available to us, as and when required, all of the charity's accounting records and all other relevant records and related information, including minutes of trustees' meetings and of all appropriate management meetings.
1.2 You have a duty to prepare an annual report for each financial year complying in its form and content with the Charities Act 1993 and regulations there under. You are also required to have regard to the Statement of Recommended Practice Accounting and Reporting by Charities, (Revised 2005) issued by the Charity Commissioners for England & Wales.
1.3 You are responsible for safeguarding the assets of the charity and hence for taking reasonable steps to ensure the charity’s activities are conducted honestly and for the prevention and detection of fraud and other irregularities.
1.4 You are responsible for ensuring that the charity 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 occur.
1.5 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 for periods commencing before 27 February 2007:
(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 Commission requiring an audit.
For periods commencing on or after 27 February 2007:
(a) the charity’s gross income in the current year is more than £10,000, but not more than £500,000 in the current year;
(b) the gross assets of the charity are less than £2.8m; or where they exceed £2.8m, gross income is less than £100, 000;
(c) no notice has been received from the Charity Commission requiring an audit.
1.6 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 trustees of the charity.
1.7 If gross income falls to £10,000 or less for the year, then, provided the other criteria set out above are met, you will need neither an audit nor an independent examiner’s report.
2 Our responsibilities as independent examiners
2.1 We shall plan our work on the basis that an independent examiner’s report is required for the year, unless you inform us in writing that either:
(a) the charity requires an audit of the financial statements; or
(b) the charity requires neither an audit nor an independent examiner’s report.
2.2 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 examiner’s report, then we shall have no responsibilities to the charity, except those specifically agreed upon between us in respect of other professional services.
2.3 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) accounting records have not been kept, contrary to the requirements of section 41 of the 1993 Act;
(b) the financial statements do not agree with those accounting records;
(c) the financial statements do not comply with any of the accounting requirements specified in regulation 4 (or 5 for common investment funds or common deposit funds)* of the Charities (Accounts and Reports) Regulations 2005/2008, except to the extent necessary to show a true and fair view.
2.4 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 examiner’s 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.
2.5 We have a professional responsibility not to allow our name to be associated with financial statements that are, or may be, misleading. Therefore, although we are not required to search for such matters, should we become aware, for any reason, that the financial statements are, or may be, misleading; if the matter cannot be adequately dealt with by means of qualifying our opinion (or by other appropriate modifications of the report), we will not issue any report. In such circumstances, we will withdraw from the engagement, and will notify you in writing of the reasons.
2.6 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 7(5) The Charities (Accounts and Reports) Regulations 2005).
or Accounting periods commencing on or after 1 April 2008
Under section 44A(2) of the Charities Act 1993 we have a statutory duty to make a written report to the Charity Commission on such matters (which relates to the activities or affairs of the charity or of any connected institution or body) of which we become aware during the course of our examination and which we have reasonable cause to believe is likely to be of material significance for the purposes of the exercise by the Commission of its functions under section 8 or 18 of the Charities Act 1993. In addition under section 44A(3) if we become aware of any matter which does not require to be reported under section 44A(2) but which we have reasonable cause to believe is likely to be relevant for the purposes of the exercise by the Charity Commission of any of its functions then we may make a report on the matter to the Commission. We may have to make this report without your knowledge and consent and we cannot undertake to you to fetter this discretion in any manner.
3 Scope of independent examination
3.1 Our work 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 purpose of our report.
3.2 As part of our normal procedures, we may request you to provide written confirmation of any information or explanations provided by you orally during the course of our work.
3.3 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.
3.4 Because we will not carry out an audit, nor 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 [present fairly the charity’s receipts and payments and its assets and liabilities at the year end].