Do Charities need an Audit? Free seminar can help ADVERTISEMENT

• Author: Stewart Russell, PKF Francis Aickin Ltd
• Published date: 25 August 2022
• Publication title: Northland Age, The

In fact, under the Charities Act, only charities whose total annual expenditure exceeds $1,100,000 must be audited

Those charities with annual expenditure between $550,000 and $1,100,000 require an independent review, which is not as extensive as a full-blown audit.

There will be a number of Charities whose Constitution’s state that their financial statements need to be audited but is this necessary or even desired?

Many of these Constitution’s would have been written many years ago, when audits were potentially performed by the local retired bank manager or JP.

Nowadays, if an audit or review is required by the Charities Act, it must be performed by a Qualified Auditor recognised by the Chartered Accountants Australia & New Zealand or by CPA Australia.

Qualified Auditors are required to follow the International Auditing Standards, with numerous regulations and mandatory procedures which make the audit a costly exercise.

This cost depends on the complexity of the organisation, systems, level of controls and types and volumes of transactions. But as a minimum is likely to be a few thousand dollars.

If the charity expenditure is less than $550,000 — you should consider if the benefit of an audit warrants the potential cost.

A common reason given for an audit is to stop someone misusing the charitable funds. Unfortunately, this is the ambulance at the bottom of the cliff. By the time the financial statements are audited, the cash has long gone, and all the auditor gets to do, is show the charity where the money went, and what controls they should have had in place to prevent it happening in the first place.

If a...