Charity sector bodies have supported proposals to raise the audit threshold from £500,000 to £1m, in a joint response to a government consultation.

The Cabinet Office proposed the doubling of audit thresholds in a consultation, Charity audit and independent examination, in December 2014, which followed on from proposals put forward by Lord Hodgson of Astley Abbotts in his review of the Charities Act 2006.

In a joint response the Charity Finance Group (CFG) and the National Council for Voluntary Organisations (NCVO) said it is “appropriate” to increase the statutory threshold for when charities have to have their accounts audited. They also suggested that “ideally this threshold should be adjusted when a financial year is more or less than 12 months and applied in conjunction with an appropriate gross asset threshold”.

“The benefits derived from audit do need to be balanced against the costs involved, particularly in the context of small charities where the cost of audit can be a high proportion of a charity’s gross income and/or assets,” they added.

The response also noted that charities with an income below the proposed threshold may still find themselves needing to audit their accounts because of requirements from funders and commissioners.

Navca has also submitted a response to the consultation indicating that it is in favour of increasing the threshold.

Nick Sladden, head of charities at audit firm Baker Tilly, said in his response to the consultation that the proposals would “serve to improve the quality of audits as well as enhancing both the awareness and value of independent examinations”.

The consultation documents also propose raising the level at which charities with assets of more than £3.26m would have to get their accounts audited, from £250,000 to £500,000. NCVO and CFG said that the £250,000 threshold should remain the same, but Sladden supported the proposal.