Does a small charity need a professional audit?

Answered 17 Sep 2007 by c.cattell

I've just attended my local village hall's AGM at which their annual report and accounts were presented.  At present they are employing a professional accountant to audit the books at a cost of £588 a year.  On a total annual turnover of just under £9,000 this represents a significant amount.

I pointed out under the Charities Act, organisations with a small turnover (I forget the exact threshold) are not obliged to have a professional audit, and can instead have their accounts "inspected" by a suitably experience lay person, who may well offer to do this on a voluntary basis.

Is this correct? 

If the management committee choose to have their accounts inspected rather than audited, would this be acceptable to funders? For example, the village hall currently receives discretionary rate relief from the local council, and in applying they have to provide a set of "audited accounts".

Committee members are also concerned that a lay inspector would be unlikely to have any professional indemnity insurance.  Is this a valid concern?  The village hall is a registered charity. 

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Charlie Cattell is a specialist in legal and governance matters relating to social enterprises, charities and voluntary organisations, assisting a wide range of groups with legal structures, organisational management, and regulatory issues.