Charities that are not also registered as a company, and which have a total income below £10,000, do not (by law) have to have any external examination of their accounts and do not have to submit accounts to the Charity Commission, although they must prepare them and make them available on request.

Charities that are not registered as a company, and which have a total income above £10,000 and below £500,000, do not (by law) have to have a full audit. Instead they can choose to have an ‘independent examination’ – a less onerous review of the charity’s records and accounts.

For charities with an income below £250,000, this must be carried out by an independent examiner, described as someone who is “an independent person who is reasonably believed by the charity trustees to have the requisite ability and practical experience to carry out a competent examination of the accounts".

For charities with an income between £250,000 (in the current year or either of the two preceding years) and £500,000, the examiner must qualify by being a member of an approved professional organisation specified under the Charities Act 2006.

Larger charities have to have an independent audit by a registered auditor. A registered auditor is one registered with a recognised supervisory body in accordance with the Companies Act 1989. In some charities, for example those connected with the NHS or local authorities, alternative auditing arrangements may be possible. They also need to draw up formal accounts, which comply with the most recent Statement of Recommended Practice for registered charities. There is a whole raft of requirements, and it is recommended that charities use accountants who are experienced in charity accounting.

Different rules apply to charities that are also registered as a company and to Community Interest Companies. Full details on the current accounting requirements for charitable companies can be found on the Charities Commission website . The position is subject to change as various parts of the Companies Act 2006 come into force. These changes are designed to make the accounting regimes for companies and non-company charities very similar.

The accounting requirements for a Community Interest Company (CIC) are the same as those of other companies (the amount of detail, and the extent to which an audit is required varies with the size of the company, and according to whether it is public or private). All the directors of a CIC have an important additional obligation to prepare an annual community interest company report to be filed with their accounts. The purpose of the report is to show that the CIC is still satisfying the Community Interest Test, and that it is engaging appropriately with its stakeholders in carrying out activities which benefit the community.

New thresholds for unincorporated charities will be introduced in 2008 so keep an eye on guidance issued by the Charity Commisssion.

Charities with an annual income below £25,000 will no longer have to submit their annual accounts to the Charity Commission under plans approved by the regulator. The threshold is currently £10,000. However, the commission intends to introduce random checks for those below the £25,000 threshold. The threshold for preparing accruals accounts for unincorporated charities will also be raised from £100,000 to £250,000.