Understanding Charity Audits | AccountantsPlus

9 Feb 2026

Charity CEOs and finance managers in Scotland - 2026 is not just an audit threshold change.

If your charity’s income is between £500,000 and £1,000,000, two changes land together from accounting periods starting on or after 1 January 2026. They affect different things and need to be managed together.

1. The audit threshold is increasing to £1,000,000 income, which may remove the automatic requirement for a statutory audit based on income alone.
2. Charities SORP 2026 is also coming in - this applies to all accruals accounts, regardless of whether you have an audit or an independent examination.

What this means in practice

• You may save audit cost, but preparation effort is unlikely to reduce.
• Income recognition, lease accounting, and narrative reporting requirements are tightening.
• Independent examination under SORP 2026 will require stronger evidence, clearer explanations, and better underlying data than many charities currently hold.

What does not change

• External scrutiny is still required.
• Funders, lenders, and OSCR expectations do not reduce because the audit threshold increases.
• Your governing document may still mandate audit, even if the regulations no longer do. Equally, some funders request audited accounts so worth checking with them.

What CEOs and finance teams should be doing now

• Confirm whether an audit is still required. Do not assume.
• Plan SORP 2026 implementation early, especially where systems are stretched or finance resource is thin.
• Brief trustees clearly on the difference between statutory requirement and good governance choice.
• Expect year end processes to change. Build this into budgets and timetables.

The risk for charities in this income band is not regulatory non-compliance. It is underestimating the combined impact of less assurance certainty and more complex accounting.

If your charity’s income sits between £500,000 and £1,000,000, this is a conversation worth having now. Trustees, CEOs, and finance leads should be asking now whether their current audit arrangements, accounting processes, and trustee reporting will still be appropriate from 2026.

Thank you to AccountantsPlus for providing resources on SORP and the new audit threshold changes.