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4. Appointment, rights and duties of the external scrutineer

Published: 12/03/2025
Updated: 12/03/2025

In appointing an independent examiner or auditor, charity trustees should consider the degree of complexity of the charity’s accounts and structure. The more complex the organisation and its accounts, a greater level of skill, knowledge and experience is required of the independent examiner or auditor appointed.

4.1 Appointing someone to carry out the external scrutiny

In deciding who to appoint as an independent examiner or auditor, charity trustees should consider the type of accounts the charity prepares and ensure the independent examiner or auditor:

  • is independent of the management and administration of the charity
  • is eligible under the Regulations to act as an independent examiner or auditor
  • is eligible under their professional body’s rules and regulations to act as an independent examiner or auditor
  • has experience of accounts to the same level and degree of complexity.

The independent examiner or auditor should have no connection with the charity trustees that might inhibit their ability to carry out an impartial examination. Whether a connection exists will depend on the circumstances of a particular charity, but the following people will always be considered to have a connection:

  • the charity trustees or anyone else who is closely involved in the management and administration of the charity
  • a major donor to the charity
  • a close relative, spouse, partner, business partner or employee of any of the people mentioned above.

An Independent Examiner of Auditor must be completely independent from the management of the charity. They should have no involvement in the record keeping or finances of the charity. 

4.2 Access to information for independent examiners and auditors

Under the 2006 Regulations, independent examiners and auditors have the right of access to any books, documents or other records that relate to the charity which they consider necessary to carry out their work. They may also require information from charity trustees or employees of the charity. This includes past or present trustees or employees.

4.3 Duty of independent examiners and auditors to report matters to OSCR

Under the 2005 Act, independent examiners and auditors must report to us any matter they become aware of regarding a charity, or any connected organisation, which they believe is likely to be of material significance to us in carrying out our functions. If they believe the matter may not be of material significance but may still be relevant to us carrying out our functions, they may still report the matter.

Further detail can be found within our guidance ‘Matters of Material Significance reportable to UK charity regulators’. 

In addition to the reportable matters set out above auditors and independent examiners may required to report any other matter which may be of significance to us in exercising our functions.  Further information is available in our guidance – ‘Reporting of relevant matters of interest to UK charity regulators’. 

There are nine areas that must be reported to us. These are:

1. Dishonesty and Fraud
matters suggesting dishonesty or fraud involving a significant loss of, or a material risk to, charitable funds or assets.
2. Internal Controls and Governance
failure(s) of internal controls, including failure(s) in charity governance that resulted in, or could give rise to, a material loss or misappropriation of charitable funds, or which leads to significant charitable funds being put at major risk.
3. Money Laundering and Criminal Activity
knowledge or suspicion that the charity or charitable funds including the charity’s bank account(s) have been used for money laundering or such funds are the proceeds of serious organised crime or that the charity is a conduit for criminal activity.
4. Support of Terrorism
matters leading to the knowledge or suspicion that the charity, its trustees, employees or assets, have been involved in or used to support terrorism or proscribed organisations in the UK or outside of the UK, with the exception of matters related to a qualifying offence as defined by Section 3(7) of the Northern Ireland (Sentences) Act 1998.
5. Risk to charity’s beneficiaries
evidence suggesting that in the way the charity carries out its work relating to the care and welfare of beneficiaries, the charity’s beneficiaries have been or were put at significant risk of harm, abuse or mistreatment
6. Breaches of law or the charity’s trusts
single or recurring breach(es) of either a legislative requirement or of the charity’s trust leading to material charitable funds being misapplied.
7. Breach of an order or direction made by a charity regulator
evidence suggesting a deliberate or significant breach of an order or direction made by a charity regulator under statutory powers including suspending a charity trustee, prohibiting a particular transaction or activity or granting consent on particular terms involving significant charitable assets or liabilities.
8. Modified audit opinion or qualified independent examiner’s report
on making a modified audit opinion, emphasis of matter, material uncertainty related to going concern, or issuing of a qualified independent examiner’s report identifying matters of concern to which attention is drawn, notification of the nature of the modification, qualification, emphasis of matterwith supporting reasons including notification of the action taken, if any, by the trustees subsequent to that audit opinion, emphasis of matter or material uncertainty identified/independent examiner’s report.
9. Conflicts of interest and related party transactions
evidence that significant conflicts of interest have not been managed appropriately by the trustees and/or related party transactions have not been fully disclosed in all the respects required by the applicable SORP, or applicable Regulations.
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