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ACCA Calls for Higher Charity Audit Threshold in Scotland – Scottish Business News
ACCA, the global accountancy body, urges the Scottish Government to raise the audit threshold for charities to alleviate time and cost pressures.
Smaller charities in Scotland face higher audit costs proportionally compared to larger ones, partly due to fewer audit firms and a lower threshold than in England and Wales.
ACCA’s analysis shows that smaller charities pay audit fees averaging 0.8% of their income, compared to 0.4% for larger charities.
Scottish charities with incomes over £500,000 require audits, while the threshold is £1 million in England and Wales.
Raising the audit threshold to £1 million could exempt around 500 charities from audit requirements, placing them under less rigorous independent examinations.
This change could help smaller charities manage their finances more effectively, especially given the current economic pressures and the difficulty in finding auditors
ACCA Strategic Engagement Lead for Scotland, Susan Love, said: “While the public rightly expects high standards of governance and transparency, we have an opportunity to relieve some cost pressure from those charities currently subject to the rigour of the audit process.
“While these charities would still be subject to external scrutiny of their accounts via the Independent Examination process, a larger pool of professionally qualified accountants can provide this service in comparison to an audit, where processes can take a lengthy period of time and specialist talent is required.
“Better and more up-to-date regulations will not only ease the burden on small grassroots charities, but it will ensure that their hard-earned fundraising will continue to go to the causes that need it most, freeing up time and money for charities to do their incredible work.”
Kirsten Hogg, Head of Policy and Research at SCVO (Scottish Council for Voluntary Organisations) said: “Over the last few years we have increasingly heard from charities facing difficulty in accessing audit, due to a combination of rising costs and a decrease in firms offering charity audit services.
“At a time when charities are facing considerable financial challenges, and a lack of resources sees staff and volunteers under considerable pressure, these difficulties present a significant challenge.
“We welcome ACCA’s support for a review to better understand these issues, and to develop sensible solutions that work for both charities and the accountancy industry, while ensuring that charities continue to meet appropriately high standards of governance and regulation.”
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