External Scrutiny of Accounts


External Scrutiny of your group’s Annual Accounts usually refers to having someone independent and/or suitably qualified to look over the accounts. How detailed that level of scrutiny is will depend on your structure, charitable status, income, the type of Accounts you prepare and/or your constitution or any decision from your group’s committee or board.


If your group or organisation has charitable status (or if your group’s constitution sets out a particular requirement) at least some level of external scrutiny of your Annual Accounts is mandatory.

External Scrutiny of Charity Accounts


The format and requirements for Annual Accounts prepared by registered charities in Scotland are set out in charity legislation regulated by the Office of the Scottish Charity Register (OSCR). All charities are required to have their 


Annual Accounts externally scrutinized, either by:


  • Independent Examination or

  • Audit


The appropriate type of scrutiny will depend on:


  • the charity’s gross annual income

  • what the charity’s own governing document (or constitution) says

  • any Act of Parliament

  • any decision by the Trustees

  • any decision of the charity’s members


Independent Examination of charity accounts


Charitable organisations should subject their accounts to independent examination, if each of the following points apply:


  •  the constitution (or other governing document) does not specify a requirement for an audit

  • their gross annual income is less than £500,000

  • they have gross assets of less than £3.26 million

  • the Charity Trustees or the charity's members have not decided an audit should be carried out

Audit of charity accounts


An audit must be carried out by your group or organisation if any of the following points apply:


  • the constitution requires the accounts to be audited

  • the charity's gross income is £500,000 or more

  • the charity has gross assets of £3.26 million or more

  • the Trustees have decided the accounts should be audited

  • the members specifically request an audit

  • any enactment of Parliament requires an audit


External Scrutiny of Accounts for Groups and Organisations without charitable status


Unincorporated organisations without registered charitable status charities are not subject to a statutory requirement for external scrutiny.  However, they will have to follow the external scrutiny requirements as set out in their constitution (or governing document).  In addition, some funders may require that the organisations they fund have some level of external scrutiny of their accounts.


Incoporated community groups or organisations (such as Company Ltd by Guarantee) are usually required to have an audit  - unless they qualify as “small” and can take advantage of 'audit exemption'.


To qualify as “small” and be exempt from audit, an incorporated group or organisation must satisfy at least two of the following requirements:


  • have no more than 50 employees

  • have a turnover of not more than £6.5 million

  • have a balance sheet total of not more than £3.26 million


Even if your group is exempt from audit requirements under Company Law, you would still be required to have your annual accounts audited, if

  • there is a requirement in your constitution (or governing document) to do so,

  • your members have requested you to

  • the Directors make a decision to do so