McArthur welcomes change to audit criteria for Scottish charities

Orkney’s MSP, Liam McArthur has welcomed news that the Scottish Government plans to increase the income threshold for charity audits in Scotland from £500,000 to £1 million, following a review of charity regulation last year. 

The threshold at which charities in Scotland require to undertake an audit has remained static at £500,000 since the Charities Accounts (Scotland) Regulations were implemented in 2006. Meanwhile, thresholds in England and Wales have increased to £1 million. 

The proposed change announced by the Scottish Government will see the number of charities obligated to undertake audits reduce from 10% to 7% of all organisations registered with the charities regulatory, OSCR. In effect, this will see 730 charities in Scotland exempt from an audit.

Mr McArthur initially made representations to Scottish Ministers and OSCR in 2022, following concerns raised with him by local charity, Crossroads who faced incurring audit costs as a result of the increased demand on and cost of its services.

Initially, both the Scottish Government and charity regulator refused to accept there was a need to increase the threshold, but following a review last year that position has now changed. 

Commenting on the news, Mr McArthur said:

“I know from my discussions with Crossroads that there has been a rise both in demand for care services and the costs of delivering them. As a consequence, Crossroads faced exceeding the threshold at which an audit is required and having to divert thousands of pounds away from service delivery to pay for audit costs. 

“When I first raised this with the Scottish Government and OSCR back in 2022, I pointed out that the threshold had not been raised since the regulations were introduced back in 2006. Unfortunately, my call for an increase in the threshold, at least in line with inflation, was rejected. 

“Last year, the government announced a review of the regulations, which provided a further opportunity to make the case on behalf of Crossroads and other charities in a similar position. I am delighted that Ministers now appear willing to bring the audit threshold in line with current economic circumstance and what is already in place south of the border. 

“Crossroads provides crucial services to some of the most vulnerable people within our community. I have no doubt at all that with audits costing up to £7000, Crossroads will be able to put those funds to much better use in supporting those most in need”.