Professional Documents
Culture Documents
Post–audit report
[date issued]
Example – Post-audit report [date issued]
Contents
Introduction for trustees .................................................................................................................... 1
We outline our approach to the audit in the next section. The report covers the findings from our audit
work under the following headings:
• An explanation of adjustments which were made to the financial statements as a result of the audit
• A commentary on the highlights of the financial statements
• The key issues identified where we consider improvements could be made and which we feel
should be addressed by the trustees as a matter of priority
• Emerging issues for the sector which are relevant for ABC Charity
• The systems and control issues which, although not a priority, should be addressed by the senior
management team under the direction of the trustees, in due course
We have discussed the contents of this report with managers of the charity and their comments are
included as appropriate. We hope that the recommendations are practical and can be implemented.
We should be grateful if you would discuss the points at a trustees’ meeting. We welcome comments
and should appreciate a written response detailing action and implementation.
We should like to express our thanks to the management team and staff for all their help with the audit.
The contents of this report and appendices are for the attention and information of the trustees and
managers only. You may only disclose the contents of this letter and appendices to third parties (such
as funders) with our permission and we cannot be held liable for any reliance placed on the contents
by third parties.
Page 1
Example – Post-audit report [date issued]
The audit approach was sent to you on [date] and our responsibilities are set out in our engagement
letter [date].
We used “substantive testing” – meaning that we verified particular transactions or balances by looking
at a sample of invoices and receipts or by tracing from source documents to the final financial
statements. At the planning stage, we designed tests to provide us with sufficient audit evidence to
support an opinion as to whether the financial statements show a true and fair view. We received
sufficient audit evidence to form our opinion from this approach.
Our audit work seeks evidence that the financial statements are materially correct. Small amounts do
not affect a reader’s understanding of the financial position. For this audit, the level of materiality we
used was £xxx for income and expenditure transactions and £xxx for balance sheet balances. These
figures were used only as a guide and were subject to judgemental change depending on the findings
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Example – Post-audit report [date issued]
during the audit. This also excluded certain transactions which are always material even when the
amount involved is small, such as transactions with trustees.
Audit process
The audit proceeded as planned and according to the agreed timetable. We can confirm that the audit
opinion will be unqualified.
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Example – Post-audit report [date issued]
None of the adjustments made to the financial statements caused a change to the net movement in
funds.
As trustees who are responsible for the preparation of the financial statements, you are responsible for
reviewing the unadjusted items and confirming that no adjustments are required to the financial
statements in the letter of representations.
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Example – Post-audit report [date issued]
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Example – Post-audit report [date issued]
Examples:
Reserves policy
The reserves policy was established several years ago and therefore reflects the risks and
environment which applied at that time. The policy should be reviewed at least annually to ensure that
the fundamental reasons for maintaining reserves are valid and that the level of reserves is
appropriate.
It was identified during the course of this year’s audit that the gift aid due in respect of the profit
generated in 2003/04 has not yet been physically paid over to the parent undertaking. To avoid
suffering corporation tax on the profits generated, the payment must physically take place within nine
months of the end of the financial year (i.e. by 31 December 2004).
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Example – Post-audit report [date issued]
Examples:
You will need to apply the revised SORP to financial statements from 31 March 2006 onwards.
However the comparatives within these accounts will need to be amended to reflect the revised SORP
and so consideration should be given to preparing a second set of figures for the year to 31 March
2005 reflecting the changes contained in the new SORP.
We have included the main features of the changes in Appendix C (not included in specimen) which
trustees may prefer to review, rather than the SORP itself.
The income of the charity for 2005 is above the £1m threshold, and it is likely that gross income in
2006 will continue to be above this.
As the SIR is designed to work with accounts prepared following SORP 2005, we would recommend
that you look at the sample SIR on the Charity Commission website http://www.charity-
commission.gov.uk/investigations/pdfs/sir2005.pdf to identify the types of information you will need to
report. This will enable you to ensure that future accounts and reports both follow the new SORP and
provide information in a format that can easily be extracted and summarised for the SIR.
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Example – Post-audit report [date issued]
Examples:
Incoming resources
One of the key risks to be addressed at the audit was that concerning recognition of income. The
results of our audit testing provide assurance over the occurrence, completeness, measurement and
treatment of income. However, there are always questions over the timing of income and whether
income should be in the year in which an activity is completed, or taken to income as it is received. We
recommend that you draw up guidance for fundraising staff so that they know in advance how income
is going to be treated in the accounts.
Pin badges
You currently sell badges of your logo in shops and banks. VAT should have been accounted for, as
this was a sale, rather than a donation. There are concessions available to charities, but you must
invite donations, rather than specifying a selling price. You may suggest a donation of, say £1. This
also enables you to buy the badges at zero-rate VAT, but you should issue a certificate to the supplier.
We can supply the wording for the certificate or you can download it from the fundraising section of our
website. You only have to type this onto your letterhead.
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Example – Post-audit report [date issued]
Debit Credit
£ £
1. Being the removal from the balance sheet of funds held by the charity on behalf of another
organisation
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Example – Post-audit report [date issued]
Debit Credit
£ £
2. Being the recognition of a debtor classified in the draft financial statements as a negative creditor
Being expenses incurred recognised incorrectly within the bank reconciliation rather than in creditors
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