The Cabinet Office has proposed doubling the income thresholds above which charities must have their accounts audited, in a consultation published yesterday.

At present charities must have their accounts audited by a member of the Register of Statutory Auditors if they have an annual income of more than £500,000, unless they have assets of more than £3.26m, in which case the threshold is £250,000.

In its consultation, Charity audit and independent examination, the government proposed increasing these thresholds to an annual income of more than £1 million, or an annual income of £500,000 for those with assets worth more than £3.26m.

It is also consulting on increasing the threshold above which charities must prepare group accounts from a total income of £500,000 to £1m.

The consultation follows on from proposals put forward in 2012 by Lord Hodgson of Astley Abbotts (pictured), in his review of the Charities Act 2006.

The proposals would remove the requirement to have accounts audited from around 4,000 charities, and the Charity Commission estimates it would save the sector around £8.7m a year, although it also estimates those charities would also incur one-off costs of £5m.

The consultation also examines whether to extend the list of professional accountancy membership bodies able to carry out independent examinations for charities with an income of over £250,000.

The consultation closes on 27 January next year.

Click here to read the 2014 Charity Audit Survey published by Charity Finance magazine.