The Charity Accountant - Independent Examinations
One of the first independent examinations I did was for a very small charity in Devon. It was one of those unusual situations where the charity was only expected to go over the £25k threshold for this particular year. The reason was due to a large sum of money that had been left to the charity in a will. For this particular situation it made the Independent exceptionally easy.
Due to the small size of the charity there was hardly any documentation to go through. There was however a need to explain the reason for the sudden hike in income to the charity commission specifically noting that this was unlikely to happen again. (unfortunately from the charities perspective!) thinking about this situation is one of the reasons I enjoy independent examinations. You never know what you’re going to find around the corner at each different charity.
However, you do not always come across such happy circumstances when undertaking Independent examinations. In fact, the main reason for completing independent examinations and audits is not to identify when things are going well. Independent examinations are a tool to help you identify errors and fraud and prevent any biased opinions being present in the accounts.
In the example above I was able to trace each expenditure from the minutes through to the receipt. In general, though this will not actually be possible. Small charities (under the 25K threshold) are often at a point where the trustees can make a decision on every single item of expenditure. As charities grow they will have no choice but to delegate expenditure to employees or volunteers. (otherwise they would do nothing but authorising payments)
This is the point where charity accounts start to get more complicated and require outside review (independent examination) to ensure they are in compliance with accounting standards and charity regulation. This is also the point where internal controls become essential but we will save that for another day!