As a church you will need to have your accounts checked by someone competent outside the PCC to ensure that you have complied with the Charities Act. Unless your turnover is over £1 million, you are likely to do this by Independent Examination rather than by an audit. The person who checks your accounts in this way is the Independent Examiner and is appointed by the Annual Parochial Church meeting (APCM). However the appointment is usually made on the advice of the PCC.
To give good advice the PCC needs to understand what the Independent Examiner is expected to do, what information they need to do it and what they will report on. They will need to ensure they are independent from the PCC and are sufficiently skilled to carry out the role. It is important for the PCC to give enough time to finding the right person for the job.
Appointing and Working with an Independent Examiner
Chapter 11 of the PCC Accountability guide provides guidance for PCCs on appointing and working with an Independent Examiner.
Further detail may be found in two documents produced by the Charity Commission:
CC31 is a Trustees’ Guide to Independent Examination. If your Gross Income exceeds £250,000 (but you are under the audit threshold), your examiner will need to be appropriately qualified, as shown by membership of one of the bodies listed in section D1 of this guide.
CC32 is a guide for Independent Examiners. This guide includes a template for the Independent Examiners report. The Charity Commission have also produced a recommended checklist for Independent Examiners to use.
Updated directions for examination of 2017 Accounts
In September 2017, the Charity Commission announced an updated set of directions that Independent Examiners are required to follow. The changes include three new directions:
- Examiner independence (Direction 2). Examiners must check for any conflicts of interest that may prevent them from carrying out the independent examination;
- Only accounts prepared on the Accruals basis are affected by the new Direction 7. This requires independent examiners to ensure that there is proper disclosure of conflicts of interest and disclosure of related party transactions; and
- financial sustainability and going concern (Direction 9). This requires examiners to check whether the trustees have considered the charity’s financial circumstances when preparing the accounts, and for Accruals accounts only, whether the trustees have made an assessment of the charity’s position as a going concern.
There is full guidance on these in the CC32 Guide for Independent Examiners.