The Charities Accounts (Scotland) Amendment Regulations 2025: business and regulatory impact assessment

Section 3: Costs, impacts and benefits

Quantified costs to businesses

Charities / Charity Trustees

There are no expected costs to charities and charity trustees. It is hoped that the increased audit income threshold will mean reduced costs for the approximately 700 charities whose income is between £500,000 and £1 million through undertaking independent examination rather than audit. It is hoped there will also be reduced time for charities to prepare for independent examination instead of an audit.

There is limited information available on a standard or average fee for charity independent examinations in Scotland. Fees can vary depending on:

• the size and complexity of the charity’s accounts
• whether the examiner is a qualified accountant or a voluntary independent examiner
• the type of accounts being examined, Receipts and Payments or Fully Accrued

Accountants / Independent Examiners / Auditors

There will be some time involved for accountants, auditors and independent examiners to review the updated legislation and OSCR guidance. However practically the changes made are not substantial and it is standard practice for this sector to continuously prepare for modified rules and requirements as part of their role.

An increase in the audit requirement threshold may cause a reduction in revenue to accountancy firms resulting from a fall in demand for audit services. However, as the same accountancy firms which currently provide audit services to charities are also likely to carry out independent examinations of those charities, any loss of revenue to accountancy firms will be offset to an extent by an increase in the requirement for independent examinations. As there is a lack of data on the number and size of firms currently providing audit services to charities, as well as the fees charged, the overall impact is uncertain. However, any revenue loss resulting from this change would likely represent a very small share of revenues for the Scottish accountancy industry as a whole – accounting, bookkeeping and auditing activities in Scotland had a turnover of £1.8 billion in 2022, the most recent year for which figures are available.^[2]

Other impacts

The new audit income threshold will apply to accounting periods beginning on or after 1 January 2026. Charity accounting periods before this time will still be subject to the previous rules.

As it is anticipated that the new safety and security dispensation will have a nil or minimal impact on the SCTS, it is difficult to quantify potential costs.

Scottish firms’ international competitiveness

Not applicable.

Benefits to business

As noted above it is hoped that the increased audit income threshold will mean reduced costs for charities whose income is between £500,000 and £1 million through undertaking independent examination rather than audit.

Small business impacts

As noted above it is hoped that the increased audit income threshold will mean reduced costs for charities whose income is between £500,000 and £1 million through undertaking independent examination rather than audit.

Investment

Not applicable.

Workforce and Fair Work

There should be no effect.

Climate change/ Circular Economy

Not applicable.

Competition Assessment

There should be no effect.

Consumer Duty

There should be no effect.