Can an examiner also prepare the accounts

Can an examiner also prepare the accounts for a small charity

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We have been approached by a small charity with income of £40k, they have asked whether we can prepare the accounts and issue the examiners review, can we, as a first glance it looks like we'd be marking our own home work.

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By David Ex
03rd Apr 2024 10:46

https://assets.publishing.service.gov.uk/media/60d9dc0a8fa8f50abecebb89/...

Your professional body might also offer guidance.

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paddle steamer
By DJKL
03rd Apr 2024 11:06

Auditors prepare accounts and audit them.

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Replying to DJKL:
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By CW2012
03rd Apr 2024 11:12

The excerpt below indicates to me that accounts need to be prepared for the examiner to examine and report on them,

An examination involves a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also involves a review of the accounts and the consideration of any unusual items and/or disclosures provided.

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paddle steamer
By DJKL
03rd Apr 2024 11:10

2.5 An examiner cannot independently review his or her own work and so the person who is thecharity’s book-keeper cannot be the charity’s examiner. In very limited circumstances anorganisation employing the examiner or the firm in which the examiner is a partner canprovide both book-keeping and independent examination services provided all of thefollowing criteria are met:
• the examiner is a member of one of the approved bodies (see Direction 1 and appendix
5) and that body has adopted/ is subject to the provisions of the Revised Ethical
Standard 2016 issued by the Financial Reporting Council (FRC)
Independent examination of charity accounts: Directions and guidance for examiners (CC32) 12
• there is documentary evidence in respect of the book keeping arrangements that the
trustees had the necessary understanding to be ‘informed management’ and the
trustees have made such judgments and decisions that are needed in relation to the
presentation and disclosure of information in the financial statements (accounts)
examined
• the independent examiner was not the book-keeper nor does the examiner report
directly to the book-keeper
• the provision of book-keeping services and the fact that the examiner has applied the
FRC’s Revised Ethical Standard are both disclosed in the independent examiner’s report

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Replying to DJKL:
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By CW2012
03rd Apr 2024 11:20

Thanks, taking the excerpt below it seems that we could undertake both accounts prep and the examination, am I misreading something as many firms are regulated by professional bodies like us and therefore would be able to do both.

In very limited circumstances an organisation employing the examiner or the firm in which the examiner is a partner can provide both book-keeping and independent examination services provided all of the following criteria are met:
• the examiner is a member of one of the approved bodies (see Direction 1 and appendix
5) and that body has adopted/ is subject to the provisions of the Revised Ethical
Standard 2016 issued by the Financial Reporting Council (FRC)

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Replying to CW2012:
paddle steamer
By DJKL
03rd Apr 2024 11:27

I think you have to consider the difference between routine bookkeeping , where the party is involved in the day to day activities of the charity ,and mere extraction of totals from that in order to prepare a report and accounts then examine same. I see little issue with the latter vis a vis independence.

Small charities routinely do not have tame accountants to hand to knock out accounts although do often have individuals that can write up a cashbook (I spent over 20 odd years as treasurer of one as I could not escape until we found a successor as treasurer)

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By Duggimon
03rd Apr 2024 11:28

So long as they to the books up to TB or similar stage where you can take their figures, code and prepare the accounts, there shouldn't be any issue. The more you have to delve in to preparing fixing the bookkeeping records the more blurry the line gets and the more safeguards you might need to employ within your firm, such as segregation of duties, second partner review etc.

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RLI
By lionofludesch
03rd Apr 2024 11:47

You can do this.

You're examining the accounting records, not the accounts.

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By CW2012
03rd Apr 2024 11:53

Thanks, yes that's a very good point

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DougScott
By Dougscott
03rd Apr 2024 13:21

I do quite a few IEs. Two clients have their accountants prepared by a Chartered Accountant and the others have a range of basic cashbooks to Quickbooks from which I prepare the accounts. Preparing the accounts from the records directly is often less time-consuming than correcting all the Chartered Accountants errors and explaining it to her!

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By Roland195
03rd Apr 2024 13:25

Surely in the vast majority of the time, charities small enough not to require audit will have accounts prepared & examined by the same firm/person?

I agree that having another firm prepare the accounts beforehand generally results in more work for the Examiner too.

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By Paul Crowley
03rd Apr 2024 13:26

The examination just says that the accounts agree with the records. Not a problem. But if you are looking for a reason not to do it, then you could use the independence issue as a reason.

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By Laurence52
03rd Apr 2024 14:39

The Charity Commission's guidance to independent examiners after section 2.5 as posted by DJKL goes on to say:
The examiner may assist in preparing the accounts
2.6 Whilst the charity trustees are responsible for the preparation of accounts, on occasion the examiner may also prepare the statutory accounts on behalf of the trustees. This should not compromise the examiner’s independence provided that the examiner ensures that the requirements of the Directions are met and:
• the accounting records have been maintained by another person
• the examiner has had no direct involvement in the day-to-day management or administration of the charity
• the trustees review and approve those accounts
2.7 The examiner may also assist the trustees to remedy defects, errors and omissions in the accounting records but when so doing the examiner must consider the implications for their report (see Directions 5 and 13). The trustees are responsible for the accounts of the charity and so the trustees must still review and approve the accounts once prepared

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