Also where gross assets of a charity exceed £3.26 million then if the income exceeds £500k (from £250k) a statutory audit will still be required.

Charities that can take advantage of the audit threshold increase will still require an Independent Examination if their gross income is over £25,000. With an Independent Examination there is less work involved than a full audit (although there are still Charity Commission Directions that need to be completed/followed as part of examination work). Unlike a full audit the internal financial internal controls operating within the charity would not be checked. Compared to an audit report the examination report will provide a more limited form of security but the report must still, as quoted from guidance below.

‘● confirm that no evidence has been found that suggests certain things have not been done by the charity, such as not maintaining proper accounting records; and

● provide a statement on specific matters that have come to their attention as the result of the examination procedures specified in the Directions.’

Please contact us  for further advice on charity accounts etc.

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Charities incorporated under the Companies Acts need to consider the financial reporting requirements under the Companies Acts and the Charities Act. All incorporated charities must prepare accounts under the accruals basis – there is no option for receipts and payments accounts for those with gross income less than £250,000.

Audit exemption under the Companies Acts is available to small charities that satisfy the criteria for small companies but the criteria for an audit under the Charities Act are lower. However, if the company qualifies as small but at least 10% of the members of the company request an audit, then an audit under the Companies Act must take place. The articles of association or constitution or a donor to the charity may also require that the accounts are examined by an independent person or that a full audit is required even if the charity meets the criteria for exemption from audit.

To qualify as a small charitable company the charity must meet two out of the following criteria:-

The audit process and requirements will be similar whether the audit is conducted under the Charities Act or the Company Acts but the report will be different in respect of the legislation it is being issued under.

Under charity law, the reporting requirements for registered incorporated charities that meet the small company thresholds are as follows:

More information can be obtained from the Charity Commission.

If you require further help please contact us.

1. Unincorporated and set up under a trust deed or constitution
2. A registered company under the Companies Acts
3. Incorporated by Royal Charter or under other legislation such as the Industrial and Provident Societies Acts
4. Incorporated under the Charities Act 2011 – a Charitable Incorporated Organisation (CIO) available from December 2012.

A charity with a gross income of over £5,000 must register with the Charities Commission. All charities with an income over £25,000 must file financial statements with the Charities Commission within 10 months of the year end. Charitable companies set up under the Companies Act are also required to file their accounts with Companies House within 9 months of the year end. The new CIOs benefit from incorporation status but are only required to deliver one set of financial statements complying with charity law with the Charities Commission rather than with Companies House under company law as well.

The accounting requirements under charity law for registered unincorporated charities vary according to their size as follows:

NOTES: R&P = Receipts and payments, Acc = Accruals accounts

However, the trust deed or constitution or a donor to the charity may require that the accounts are examined by an independent person or that a full audit is required.

Receipts and payments accounts are drawn up on the basis of total money received and paid out. A statement of assets held and liabilities owed is included.

Accrual accounts are drawn up on the basis of income being earned and expenses incurred regardless of the date of receipt and payment. Accruals accounts should give a true and fair view and need to follow the guidelines set out in the Statement of Recommended Practice Accounting and Reporting by Charities 2005 which details disclosure and accounting treatment.

Templates packs can be downloaded and more information obtained from the Charities Commission website as follows:

• Receipts and payments
• Accrual accounts

In addition a Trustee Report will be required and a template can be downloaded from the links above.

The requirements for charitable companies incorporated under the Companies Acts will be dealt with in a separate article next month.

If you require further help please contact us

Corporation Tax

1. The main rate of corporation tax will be cut a further 1 % from April 2014 to 21%.

Business Tax (Companies and self employed)

1. There will be a temporary but significant increase in the Annual Investment Allowance  from £25,000 to £250,000 for two years to support new investment  in plant machinery by small and medium sized businesses. It would appear the increase applies for two years from 1 January 2013.

Please contact us before taking any action as transitional rules will apply on the change from £25,000 to £250,000 in the period 1 January 2013 - to 31 March 2013 for corporation tax and to 5  April 2013  for income tax.

Income Tax

1. A further  increase of £235 in the personal allowance for individuals in April 2013 taking it to £9,440 for the 2013/14 tax year.
2. The higher rate threshold will be increased by 1% rather than inflation in 2014-15 and 2015-16.
3. From 2014-15 there will be reductions to tax relief available on pension contributions. The lifetime allowance for pension contributions will be reduced from £1.5 million to £1.25 million and the annual allowance from £50,000 to £40,000.

Capital Gains Tax

1. The  annual exempt amount for capital gains will be increased by 1% each year in 2014-15 and 2015-16.

Inheritance Tax

1. Inheritance tax nil rate band will increase by 1% in 2015-16 from £325,000 to £329,000.

Other measures announced include the following:

1. Cancelling the 3.02 pence per litre fuel duty increase planned for 1  January 2013, deferred to 1 September 2013.
2. Working age tax benefits (excluding disability and carers benefits) will be up rated by 1 % for three years from April 2013.
3. State pension will increase by 2.5%.
4. New tax avoidance legislation will be introduced.
5. A Business bank will be created to provide finance and support for smaller businesses.

For full details see 2012 Autumn Statement

Please contact us  if you require further information and assistance.

Audit thresholds for small companies have been aligned with accounting thresholds for small companies. Small companies will therefore be entitled to an exemption from mandatory audit if they meet two out of the three mandatory criteria:

• No more than 50 employees;
• No more than gross assets of £3.26 million;
• Less than £6.5 million in turnover.

There are also new exemptions from mandatory audit for certain subsidiary companies and dormant subsidiaries from preparing and filing accounts.

Changes also make it easier for companies who currently use IFRS(International Financial Reporting Standards) voluntarily to switch from IFRS to UK GAAP when preparing their accounts.

Is your year end 30 September 2012? Are you required to have an audit under the old rules but not the new rules? If so and you would be interested in not having an audit for the year to 30 September 2012, contact us.

For further details please contact us.