The audit threshold for charities in Scotland is set to increase to £1m, the Scottish government has announced. 

Shirley-Anne Somerville, the cabinet secretary for social justice, has written to Collette Stevenson, convener of the Scottish Parliament Social Justice and Social Security Committee, to update the committee on results of a public consultation about a proposed review of charity regulation north of the border.

Somerville said the process had already highlighted some practical changes charities were seeking that could be delivered without a review. 

“Charities have made clear the challenges in the availability and affordability of auditors they are facing, citing the current audit income threshold level as too low,” the letter says. 

“As such I intend to introduce new regulations in the autumn to raise the current threshold from £500,000 to £1m, ensuring that the regulation and monitoring of charity accounts is proportionate.”

Charities in England and Wales with annual incomes of £1m or more are required to undergo an audit but the threshold in Scotland has been £500,000 since 2005. 

The letter says the government intends to bring forward commencement regulations to fully implement the Charities (Regulation and Administration) (Scotland) Act 2023, one in the summer and one at the end of 2025. 

The move would “enhance accountability and transparency in charities, which is a key finding from the consultation analysis”, Somerville said. 

She also said the Scottish government would convene a working group to examine the challenges some charities can face when looking to incorporate to a Scottish charitable incorporated organisation. 

The letter says the government received 163 responses to its consultation last year about a review of charity regulation in Scotland, many of which said the exercise should be “wide-ranging, independent of the Scottish government and sector-led”. 

But it also says: “There were different opinions about what a review should cover and why one is needed. 

“Therefore, it is right that time is taken to shape this work, and I am committed to working with the charity sector to refine the scope over the longer term.”

Katriona Carmichael, chief executive of the Office of the Scottish Charity Regulator, said the plans would “improve charity regulation and help to maintain public trust in the sector and its individual charities”. 

She said: “We have already implemented some provisions of the Charities (Regulation and Administration) (Scotland) Act 2023, and our work to deliver the remaining elements is well underway. 

“We are on track to fully implement the legislation, including collecting and publishing the names of charity trustees on the Scottish charity register and making five years of financial accounts publicly available for each charity, when these provisions come into force in the summer and at the end of 2025.”

Carmichael said the OSCR was aware of issues facing some charities when they were looking to close or become a Scottish Charitable Incorporated Organisation. 

“We are aware of these issues and are particularly keen to be able to deal with the issue of SCIOs that are breaching their duty to submit accounts and to engage with us, as we have been able to do successfully with other kinds of charity following the 2023 act,” she said.