By Katie Halsall, Director of Audit and Assurance, Caldwell Penn

If you’re running a charity, you probably know the audit thresholds, and you may be aware that these are increasing later this year. If your income is between £1m and £1.5m, you may no longer need to have an audit.

You could see this as a win – less hassle, cost savings.

But stopping having an audit isn’t necessarily the right decision.

We anticipate that many charities will choose to continue with an audit voluntarily, even when they no longer legally need one. And in many cases, there are very good reasons why.

At Caldwell Penn, we’re increasingly seeing charities view audits less as a compliance exercise and more as a valuable tool for governance, transparency and long-term sustainability.

The shift we’re seeing

Historically, many organisations viewed audit exemption as an opportunity to reduce costs and administrative burden.

However, trustees are becoming increasingly aware that an audit can offer much more than simply meeting a legal requirement – particularly in a sector where trust, accountability and strong financial governance are so important.

1. Funders and stakeholders value reassurance

Charities are accountable to a wide range of stakeholders – trustees, donors, grant funders, regulators and beneficiaries.

An audit provides reassurance that the charity’s finances have been reviewed thoroughly and that financial reporting can be relied upon.

In some cases, funders may not formally require audited accounts, but having them can still strengthen funding applications and increase confidence in the organisation’s governance and financial management.

2. Stronger governance and financial oversight

A voluntary audit can also help charities strengthen their internal processes and controls.

The audit process often highlights areas where systems, reporting or procedures could be improved, helping trustees identify risks early and improve financial oversight.

For growing charities, implementing an audit before it becomes mandatory can make future transitions much smoother and avoid a rushed process later down the line.

3. Building trust and credibility

For charities, reputation matters.

Audited accounts can help demonstrate transparency and accountability to supporters, members and the wider public.

This can be particularly valuable for charities managing large grants, public donations or partnerships with local authorities and corporate organisations.

In a competitive funding environment, being able to demonstrate strong financial governance can help charities stand out.

4. Preparing for growth and increased scrutiny

Many charities are expanding services, applying for larger grants or entering into more complex funding arrangements.

As organisations grow, so does the level of scrutiny from funders, regulators and trustees.

Having an audit in place early can help charities prepare for that growth by ensuring financial reporting processes are already robust and well established.

5. Added value beyond compliance

A good audit should do more than simply tick boxes.

The best audit relationships provide charities with practical insight, constructive feedback and an external perspective on financial processes and risks.

At Caldwell Penn, we work closely with our charity clients throughout the year, helping them navigate challenges and strengthen financial governance – not just at year end.

But what about the cost?

Cost is often one of the main reasons charities consider moving away from an audit.

However, trustees should weigh that cost against the wider benefits an audit can bring – including stronger governance, increased funder confidence and improved financial oversight.

In many cases, the value of that reassurance significantly outweighs the cost itself.

The bottom line

While the new thresholds may mean some charities no longer require a statutory audit, that doesn’t automatically mean stopping one is the best decision.

For many organisations, continuing with an audit remains an important investment in transparency, governance and long-term sustainability.

How Caldwell Penn can help

At Caldwell Penn, we work with charities of all sizes to provide practical, collaborative and tailored support. If an audit isn’t necessary, we won’t force you down this route and we can do your Independent Examination instead.

If your charity is considering whether to continue with an audit voluntarily, our team would be happy to discuss the options and help you decide what’s right for your organisation.