Change will help thousands of charities
News OSCR is to double the audit threshold for charities has been praised by a leading chartered accountants’ body.
The Office of the Scottish Charity Regulator announced this week the Scottish Government was to increase the amount from £500,000 to £1 million.
It follows a public consultation on the issue in which smaller charities said the financial burden of audits was costly and time consuming when resources could be better used elsewhere.
Following the news, the Institute of Chartered Accountants of Scotland (ICAS), which was heavily involved in petitioning for the increase, said it was great news for the sector in Scotland.
Christine Scott, head of Charities and Reporting at ICAS, added: “With charitable organisations continuing to face considerable financial pressures, particularly those close to the audit threshold, this change will help them target their resources to where they are most needed.
“We regularly hear from charities and members who find it difficult to operate with the £500,000 audit threshold.
“This change delivers more proportionate scrutiny of Scottish charities and closely aligns with the audit threshold in England and Wales. This is a great start.
"We’re also calling for the introduction of a year’s grace for a one-off breach of the threshold, which can happen when a charity receives a singular income such as a legacy or donation.
“We believe the costs of having an audit in a single year outweigh the benefits.
“We also want to see continued alignment of the requirement for the preparation of group accounts with the audit threshold. This change would further help deliver proportionate reporting and scrutiny requirements for Scottish charities.
“There have been calls from the sector for a threshold increase in England and Wales too and given the imminent 50% increase in the company law audit threshold, it’s important that the Scottish Government commits to regular reviews of the Scottish charity audit threshold.”
Shirley-Anne Somerville, the cabinet secretary for social justice, said practical changes charities were seeking could be delivered without a review.
“Charities have made clear the challenges in the availability and affordability of auditors they are facing, citing the current audit income threshold level as too low,” she said in a letter to Collette Stevenson, convener of the Scottish Parliament Social Justice and Social Security Committee.
“As such I intend to introduce new regulations in the autumn to raise the current threshold from £500,000 to £1m, ensuring that the regulation and monitoring of charity accounts is proportionate,” she wrote.
Katriona Carmichael, chief executive of the Office of the Scottish Charity Regulator, said: “We have already implemented some provisions of the Charities (Regulation and Administration) (Scotland) Act 2023, and our work to deliver the remaining elements is well underway.
“We are on track to fully implement the legislation, including collecting and publishing the names of charity trustees on the Scottish charity register and making five years of financial accounts publicly available for each charity, when these provisions come into force in the summer and at the end of 2025.”
