Role of lawyers and auditors

Charities are subject to increasingly complex legislation and it is important that you seek advice when you need it from lawyers and auditors.

Lawyers

You may wish to consult lawyers in some circumstances for example when you are Choosing a Legal Structure, creating publications, considering trademarks or have employment issues to discuss.  Small organisations may be able to get basic advice (although probably not on employment law) from funded/community legal services.  At other times you may need to use commercial law firms which specialise in charity law.

When you may need an auditor

The audit and examination thresholds have been increased again with the aim of reducing the regulatory burden on smaller charities.  These changes relate to financial years starting on or after 27 February 2007.  The rules for charitable companies and charities that are not companies are slightly different and will be reviewed again late in 2007.

Audit requirements

Whether or not a charity requires an audit will depend mainly upon how much income is received or generated.

  • Charitable companies with income of more than £500,000 per annum or assets of more than £2.8 million must have an audit
  • Charities that are not companies with income of more than £500,000 per annum or with assets exceeding £2.8 million and gross income over £100,000 must have an audit
  • Charities with governing documents which require an audit will still have to have their accounts audited even if they are below the monetary limits
  • Charity trustees will still be able to decide to have an audit undertaken even if the charity is below the relevant thresholds.

Independent examination or accountant’s report:

  • Charitable companies with income between £90,000 and £500,000 per annum and with assets below £2.8 million require an accountant’s report
  • Charities that are not companies with income above £10,000 per annum need to have an independent examination undertaken

Useful links

LawWorks for Community Groups provides free legal advice to small  charities, voluntary and community organisations and social enterprises in England and Wales via a network of volunteer lawyers.

Charities and Public Service Delivery – An Introduction and Overview (legal compliance section)

Health & Safety Executive

Office of the Third Sector - Charity Law and Regulation

Legal Services for Charities

HMRC Charities – Tax and VAT information for charities

Community Interest Companies - Legal regulations

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