Audit requirements for charities

Under what circumstances must an Irish or UK charity be audited?

Republic of Ireland

In the Republic of Ireland, a charity operating as a limited company is subject to the same Company Law provisions as other companies. In addition to this, any charity (including charities operating as companies) with annual income in excess of €250,000 is required to carry out an audit as outlined on the Revenue website. 

Northern Ireland

In the UK, there are differing thresholds at which a statutory audit applies to charities. The differing requirements largely depend on the size of the charity and the jurisdiction in which it is located. In Northern Ireland, an audit is required when the charity’s gross income exceeds £500,000.

In addition to the above requirements, there may be other circumstances, some of which are outlined below, which may result in the charity requiring an audit.

Requirement for an independent examination

Where a UK charity does not exceed the thresholds requiring a full audit, it may still be required to have an independent examination carried out on its financial statements. Most charities are able (based on their size) to have an independent examination.

An independent examination involves a lower level of scrutiny than an audit and does not involve the independent examiner concluding as to whether the financial statements give a true and fair view. The monetary thresholds at which UK charities are required to have an independent examination are set individually in England & Wales, Scotland and Northern Ireland. In Northern Ireland, a charity who does not exceed the audit threshold (as outlined above) can obtain an independent examination. See guidance issued by the Charity Commission for Northern Ireland.

If the above annual income thresholds are not exceeded what other circumstances might require a charity to have their annual report audited?

Many charities who have not exceeded the above income limits in the Republic of Ireland or Northern Ireland might still require an audit of their financial statements. This could be for several reasons, including:

• Failure to file its annual return with the CRO in the Republic of Ireland (note that new rules apply in relation to such breaches from July 2025)
• The charity might be required to obtain an audit in order to satisfy a funder before they provide funding
• Voluntary- the charity might want to obtain an audit to demonstrate transparency and accountability, or because a portion of the trustees would like the annual report audited
• The charity might have stated in its constitution that they will get their annual financial statements audited
• The charity might choose to get their financial statements audited if their income is close to the threshold limits and they expect to exceed the limits in future years

What additional considerations and risks might be present in the audit of a charity?

The requirements for an audit of a charity will follow the same standards as that for a regular entity and therefore an auditor will be subject to the same underlying framework of International Auditing Standards while carrying out their audit. Despite this, there are some additional considerations which may be present in the audit of a charity compared to that of a "for-profit" entity. This will require an auditor to tailor its approach and document it accordingly. Some additional considerations might include (but are not limited to):

• Whether the charity is in compliance with the requirements of the Charities Act in its jurisdiction, and whether any matters have been reported to the regulator relating to the charity
• Whether the charity has complied with the conditions required to retain its charitable status
• Whether the charity has suitable systems of internal control in place to prevent and detect fraud
• Whether the charity has maintained adequate books of account
• Completeness of income from exchange transactions and non-exchange transactions
• Whether the charity received any restricted funds during the year, and whether this was spent in accordance with the terms imposed by the funder.
• The financial reporting framework used, including whether the charity financial statements are prepared in accordance with the Charity SORP

Given the specialised nature of charity audits, audit practitioners should ensure that their audit procedures are tailored for the nature of the engagement and that professional competence is maintained in the area of charities. Chartered Accountants Ireland can assist with this and further information and assistance is available via;

• Charity related events which are included in our CPD offering
• Charity PQA toolkit which is available to purchase from our Practice Consulting team 

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