Recent changes to charity audit thresholds in England and Wales do not apply in Scotland, and cross-border charities which are registered with OSCR must take care to comply with the Scottish thresholds.

Following Lord Hodgson's review of charity law south of the border, a proposal to increase the audit exemption threshold was given effect in England and Wales. The threshold increased from £500,000 to £1 million for accounting years ending on or after 31st March 2015. The income limits for group audit exemption and for the preparation of consolidated accounts also increase from £500,000 to £1 million. These changes, however, do not apply in Scotland.

The Scottish threshold for audit remains at £500,000, which means that charities registered only with OSCR, and charities established in another jurisdiction but which are also registered with OSCR (cross-border charities), must continue to comply with the Scottish audit threshold.

Where charities fall below the audit threshold, they generally qualify for the lighter touch form of external scrutiny known as independent examination, although charitable companies may still need to have a full audit unless they qualify as small companies. Charities also require to have a full audit regardless of income level if they own assets with a value in excess of £3.26 million, or where their constitutions or other legislation requires an audit to be carried out. Some charities are also obliged to have a full audit by their funders or by other third party requirements.

It is crucial that cross-border charities registered with OSCR continue to have their accounts audited unless they meet both the Scottish and English tests for independent examination. Failure to do so will result in charity accounts falling short of the regulatory standard imposed and could mean that accounts will be rejected and sent back to the charity for audit and re-submission.

At present there are no formal moves from the Scottish Government to amend the Scottish audit thresholds.

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