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Independent examination and the role of an independent examiner

A presentation from the Association of Charity Independent Examiners (ACIE) on what is involved in an independent examination and the role of the independent examiner.

Independent examination and the role of an independent examiner

  1. 1. Independent Examination and the Role of the Independent Examiner Chris Smith FCIE
  2. 2. What is an Independent Examination?  Form of external scrutiny of charity accounts  A statutory report to accompany the accounts  Subject to legislation and regulation: – The Charities Act (Northern Ireland) 2008 – The Charities (Accounts and Reports) Regulations (Northern Ireland) 2015 – Charities SORP (FRS102)
  3. 3. Role of the examiner  Has the charity kept accounting records that comply with section 63 of the Act or if a company with the Companies Act  Do the accounts agree with those records?  Do the accounts comply with the requirements of the Act and Regulations, or if a company the Companies Act  Is there any other information needed for readers to understand the accounts?
  4. 4. Role of the examiner  Has the charity spent money or carried out activity out-with its charitable purposes or the restrictions placed on some funds?  Has any information been withheld from the examiner?  If accrued accounts are prepared is the Trustees Annual Report consistent with the accounts?
  5. 5. Can you act as a charity’s independent examiner? 1. Can the charity have an independent examination? 2. Am I independent of the charity? 3. What am I being asked to do? 4. Do I need to be qualified? 5. Do I have the required skills, experience and professional permission?
  6. 6. 1. Can the charity have an independent examination? Charities can have an Independent examination if:  Gross income below £500,000  And there is no requirement for audit from: Constitution Other legislation Funders or donors
  7. 7. 2. Am I independent of the charity?  Not a trustee  Not involved in the administration of the charity  Not a major donor or beneficiary  And not connected to the above by being a: Close family member Business partner or employee  Must be perceived to be independent
  8. 8. 3. What am I being asked to do?  Often a dual role - Prepare the accounts - Examine the accounts  If preparing the accounts - It is on behalf of the trustees - Accounts must be signed before your report  If examining accounts only - Do IE while still draft accounts
  9. 9. 4. Do I need to be qualified? Income of charity Independent examiner Up to £250,000 Anyone the trustees consider has the required skills and experience to competently carry out an independent examination Exceeds £250,000 As above plus a Fellow of ACIE or member of one of the 10 other professional bodies recognised in section 65 the 2008 Charities Act
  10. 10. 5. Do I have the required skills, experience and professional permission?  Knowledge of charity accounting especially “Fund” accounting  Knowledge of the appropriate legislation and regulations  Knowledge of charity itself and the charitable sector  Skills to understand the charity’s accounting records  Experience of charities of a similar size and complexity
  11. 11. Before you start  Contact the previous examiner or auditor – Any issues you need to be aware of – Detailed figures for the start of the year and for comparison  Letter of engagement – Services provided – Fee or billing arrangements – Scope of your work and content of your report – Your right of access to books and records of the charity – Your entitlement to information and explanations from past and present trustees or employees
  12. 12. 12 Before you start If charging for services - register as a provider of financial services Consider Money Laundering Regulations & Proceeds of Crime Act  Do they apply? – Yes if charging for financial services  Risk assess your business and new clients  Formal identification procedures for charity and key personnel  Keep records relating to client identity and risk assessments
  13. 13. Carrying out the independent examination  The Charity Commissions’ 10 Directions to independent examiners  The Charity Commissions’ guidance to carrying out an examination  The ACIE Independent Examination File
  14. 14. Carrying out the independent examination  Planning and preparation  Recording your work  Check can have an IE and correct type of accounts prepared  Check accounting records comply  Check accounts reflect accounting records  Check form and content of accounts  Check for unusual items or disclosures  Draw your own independent conclusion and prepare your report
  15. 15. 15 Duty to report to the Commission or other authorities  Proceeds of Crime Act 2002 and Serious Organised Crime and Police Act 2005  Reporting to the Commission under section 67 of the 2008 Act: – Mandatory If materially significant to the Commission – Discretionary - If likely to be relevant to the Commission
  16. 16. Final sign off - Management letter  Formal completion of your agreement  If qualified report - explains why  Opportunity to make recommendations for improvements
  17. 17. Summary  Statutory appointment  Often a dual role – maintain the distinction between the two  Ensure you have the required skills, experience & qualification  Fully understand the requirements of the Act and Regulations  Plan and record your work  Maintain independence of judgment in reaching your conclusions
  18. 18. 18 ACIE - Membership  Affiliate  Associate - R&P to £100,00 - R&P to £250,000 - R&P to £250,000 and accruals to £100,000 - All accounts to £100,000 - All accounts to £250,000  Fellow - All accounts to the legal limit for IE 
  19. 19. 19 ACIE – Applying for full membership  Join as an affiliate  Review your knowledge and experience against ACIE checklist  Prepare two sets of accounts appropriate to the category of membership you wish to apply for  If not able to carry out IE get someone else to do the IE  Complete application form with questions on theory and practice of IE
  • GhulamMohyudDin11

    Sep. 19, 2018

A presentation from the Association of Charity Independent Examiners (ACIE) on what is involved in an independent examination and the role of the independent examiner.

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