The previous threshold had been £500,000

The Scottish Government's recent commitment to raise the charity audit income threshold to £1 million marks a significant shift in the regulatory landscape for Scottish charities, experts have said.  

The change, set to take effect with the introduction of new Charities Accounts (Scotland) Regulations in the autumn, aims to alleviate some of the financial and administrative burdens faced by many charities.

Charities with annual incomes between £500,000 and £1m stand to benefit the most from this regulatory change. 

Previously required to undergo costly and time-consuming audits, these organisations can now opt for independent examinations, which are generally less rigorous and more cost-effective. 

This shift is expected to free up resources, allowing these charities to allocate more funds directly to their charitable activities.

Keith Macpherson, audit partner at Henderson Loggie specialising in the charity sector, said: “This increase in the charity audit income threshold after 20 years at the existing level will be a welcome development for many Scottish charities. It will require careful planning and consideration by trustees to ensure continued financial oversight and compliance with both regulatory and internal governance requirements.’

“Although many charities with incomes below £1m will no longer be required to conduct full audits, trustees must ensure that their governing documents do not specifically require an audit to remain compliant. The expectations of key funders may also need to be considered.’

“Transitioning to the independent examination framework  requires trustees to select appropriately qualified examiners to maintain financial transparency and stakeholder confidence. The Office of the Scottish Charity Regulator (OSCR) provides trustees with guidance on the selection of an independent examiner.”