The income threshold where charities in England must submit an audit of their accounts should be raised from its current level of £1m to £1.5m, says the Association of Chartered Certified Accountants (ACCA).

The move is needed to keep the threshold in line with inflation and ACCA also wants the government to commit to reviewing thresholds at least every 10 years, with it preferring reviews to take place every five years.

The accountancy body says the move is needed to “ease charities’ financial burden” and notes that charities’ financial reporting thresholds have remained unchanged since 2015.

Currently they are “outdated” and are “no longer reflective of the current economic environment and operational context of the charity sector”.

The recommendations have been made in the body’s response to a Department of Culture, Media and Sport consultation on financial thresholds in charity law.

Joe Fitzsimons, ACCA’s regional lead, policy and insights, said: “This is not simply about the effect of inflation, but recognising that the threshold is set in the context of the distribution of income across the charity sector.

“There is evidence that the availability of auditors is proving a challenge to trustees and increasing the threshold for audit would be a pragmatic step to easing this situation.”

Scottish charities

ACCA points out that in Scotland charities with an income of more than £500,000 are required to undergo an audit but following a Scottish Government consultation it is being proposed this is increased to £1m.

The accountancy body is also urging the DCMS to consider “ongoing dialogue” with other UK nations around “synchronising future threshold reviews” to create a “more coherent UK approach”.

“It is important that financial thresholds are proportionate for smaller charities,” said ACCA head of technical and strategic engagement Glenn Collins.

“A periodic, systematic review is essential to ensure the regulatory environment evolves with the sector. Our recommendations aim to balance accountability and fairness, freeing up vital resources to function.”

Extending the threshold to £1m for charities in Scotland has been backed by the Institute of Chartered Accountants of Scotland (ICAS).

“Increasing the threshold for when a cashflow statement is required will ease the reporting burden on some larger charities, which is a positive step,” said ICAS head of charities and reporting Christine Scott.

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