Auditors have always been expected to have relevant knowledge commensurate to the task in hand. Every charity practice note has always made this point and the new proposals repeat this, requiring audit teams to have suitable understanding of the type of charity being audited, the key risks affecting the charity, the applicable legislative framework and the principles of the FRS and the Charities SORP (Statement of Recommended Practice). The auditors also need to consider the charity’s governing documents, which may also include specific reporting requirements, the legal responsibilities and duties of charity trustees, and the regulatory framework within which charities operate.

Now the 74-page exposure draft, Practice Note 11 The Audit of Charities in the United Kingdom, is out for consultation and this is long overdue. There have been numerous changes in the five years since the last practice note was finalised and as a result it was looking dangerously out of date.