The type of external scrutiny you choose depends on:

• Your charity’s governing document
• Gross income and net assets and
• Whether or not your charity is a company

There are two recognised forms of external scrutiny:

Independent Examination

An independent examination looks at a charity’s accounting records and annual accounts and considers whether the accounts are a fair reflection of the underlying records.

It provides a degree of comfort to the reader that the figures in the financial statements and within the Trustees’ Annual Report present an accurate picture of the financial activity of the charity for the accounting period.

Audit

Under the accounting regulations, if the term ‘audit’ is used in your charity’s constitution or governing document, you must have your accounts audited by either:

• a registered auditor
• the Auditor General for Scotland
• an auditor appointed by the Accounts Commission for Scotland (responsible principally for public bodies).

Audits are more commonly required for larger charities, although smaller charities may also have to have an audit if this is stated the in governing document or through a decision made by the charity trustees.