Independent examination · Trustee guide
Independent examination or audit: what is the difference?
Independent examination and audit are different forms of scrutiny with different objectives and reports. Trustees need to identify which their charity requires, then appoint someone eligible for that work. The decision is especially relevant when income grows, a major grant is agreed or a governing document contains an audit clause. Begin with the obligation and the intended report, then compare quotations for the correct service.
The assurance is different
An audit provides a reasonable-assurance opinion on the financial statements. The auditor assesses risks and obtains evidence to support that opinion. Reasonable assurance is a high level of assurance, but it is not an absolute guarantee. Financial Reporting Council: what is an audit?
Independent examination has a narrower statutory purpose. It examines specified matters about the accounts and records without giving the audit opinion that the accounts show a true and fair view. Its more limited scope usually makes it less costly than an audit. Charity Commission: independent examination overview
The route depends on more than preference
Income and gross assets are important, but a governing document, funder, regulator or company-law requirement can also require an audit. Trustees cannot simply select examination because its fee is lower. Charity Commission: choosing the appropriate scrutiny, CC31
For example, a small grant-funded charity might fall within the financial limits for examination while its grant agreement expressly requires audited accounts. That wording deserves attention before the trustees commission a report. If its meaning is unclear, obtain clarification from the relevant party before relying on an assumption.
The financial year end matters in 2026
New thresholds apply to financial years ending on or after 30 September 2026. Earlier year ends retain the previous rules, including where the accounts are prepared after September. Charities Acts 1992 and 2011: 2026 threshold Order
Give a prospective adviser your exact accounting period and figures. A statement such as “we are below this year's threshold” leaves open which year and which test you mean. Our separate eligibility guide sets out the figures and transition examples.
Check the provider's authority and the quote
AAT permits appropriately licensed members to provide independent examination within their individual approval. Statutory audit requires separate eligibility; an independent-examination licence should not be presented as audit authorisation. AAT licences and services
When comparing proposals, check who prepares the accounts, which report is included, who deals with follow-up questions and whether filing assistance is included. A quote for examining completed accounts may cover materially different work from a quote that also includes accounts preparation.
Make the decision clear to the board
Record the required service, the reason for that choice and the scope being purchased in the board's decision record. Avoid using “audit” casually in internal timetables when the appointment is for examination: consistent wording helps trustees, staff and funders understand the expected outcome. Request an initial eligibility review if you need help establishing whether independent examination is a suitable route for your charity.
Apply this guidance to the right facts
This is general information, not advice or a completed eligibility assessment. Scotland and Northern Ireland have separate requirements. Check the relevant law, regulator, governing document, funding terms and accounting period before making a decision.
Any engagement and its scope must be agreed separately.