Independent Examinations and Financial Controls

However, the review of controls is limited to those areas necessary to support the Independent Examiner’s report, which concentrates on checking the statutory accounts to the records.

This is an example of the expectations gap, a difference between the expectations of users of assurance reports and the examiner’s statutory responsibilities.

For instance, these areas would not normally be looked at in detail as part of an Independent Examination;

• Appropriateness of authorisation and procurement procedures
• Extent of Trustee review of management accounting information
• Payroll controls, checking and approval
• Controls to ensure income is complete
• Procedures for ensuring all restrictions on income are complied with
• Compliance with VAT regulations and best use of rules
• Ensuring fixed assets are maintained and secure
• Review of risk register and mitigations

Many of these areas are covered in an audit, but if the charity doesn’t need a statutory audit, it can be helpful and better value for Trustees to engage a charity specialist accountant to carry out a limited assignment reporting specifically at one or more of the above areas, or other areas of concern identified by the Trustees, as part of the overall risk mitigation strategy and particularly in circumstances when charities are growing and changes to existing procedures may be required.

These additional focus projects can often also give rise to specific additional benefits, eg better VAT recovery, tax reduction, improved documentation of internal processes and advice on legal structure for groups.

The next step

For any further advice, please contact your Caroline Webster, or your usual UHY Charity adviser.