Audit or independent examination: which does your charity need?

Many charities in England and Wales now have a choice. For financial years ending on or after 30 September 2026, charities with income above £40,000 and up to £1.5 million can usually pick either an independent examination or an audit.

Our earlier article, New charity thresholds, sets out the new limits. This one helps trustees decide between the two.

The rules in short

Gross income	What is required
£40,000 or less	No audit or examination, unless your governing document or a funder asks for one
Over £40,000 and up to £1.5 million	Your choice of independent examination or audit, unless your governing document or a funder requires an audit
Over £500,000 and up to £1.5 million	If you choose examination, the examiner must belong to a body listed in the Charities Act 2011
Over £1.5 million, or over £500,000 with gross assets above £5 million	An audit by a registered auditor

Scotland and Northern Ireland have their own rules. The Commission also publishes a separate guide for trusts and associations, charitable companies and CIOs, so use the one that matches your charity.

How the two differ

An audit is a detailed check by a registered auditor. It tests the figures and the controls behind them, and it gives a formal opinion on the accounts.

An independent examination is a more limited review. The examiner checks that the accounts agree with the records and looks for anything that needs attention. It usually costs less and takes less of your team's time.

When an audit may still be the better choice

A funder, lender or landlord requires one.
Your governing document asks for an audit.
Trustees want a higher level of assurance, for example after a change of finance lead.
You hold large reserves, complex restricted funds or significant assets.

When an examination is usually enough

For many small and medium charities, an independent examination gives trustees the assurance they need at a lower cost and with less disruption. It also keeps the year-end process simpler for a small finance team.

What to do now

Check your gross income and gross assets against the table for your year end.
Read your governing document and every funding agreement for audit or examination clauses.
Ask your funders and lenders in writing what they will accept.
Agree the decision at a trustee meeting and record it in the minutes.
If you change from audit to examination, tell your current auditor early and plan the handover.

If you are weighing up the two, talk to us. We can tell you which fits your charity and what it involves.

This article is general commentary, not advice for your specific circumstances. Sources: Charity Commission, charity accounts rules for trusts and unincorporated associations; Charity Commission, charity accounts rules for charitable companies; GOV.UK, all charities urged to check new rules for accounting for 2026.