“6A Transitional, savings, and related provisions

• The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.”

“42C When financial statements must be audited or reviewed

• “(1) This section applies to—

  • “(a) every charitable entity that is large; and

  • “(b) every charitable entity that is of medium size.

  “(2) Every charitable entity to which this section applies (A) must ensure that the financial statements of A that accompany an annual return under section 41 are—

  • “(a) audited by a qualified auditor if A is large in respect of the accounting period to which the financial statements relate:

  • “(b) audited or reviewed by a qualified auditor if A is of medium size in respect of the accounting period to which the financial statements relate.

  “(3) If financial statements are prepared on a consolidated basis in respect of a single entity under section 46(1A)(a),—

  • “(a) the parent entity must ensure that the financial statements of the single entity that accompany an annual return under section 41 are—

    • “(i) audited by a qualified auditor if the single entity is large in respect of the accounting period to which the financial statements relate:

    • “(ii) audited or reviewed by a qualified auditor if the single entity is of medium size in respect of the accounting period to which the financial statements relate; and

  • “(b) for the purposes of paragraph (a), the references to a charitable entity in subsection (1) and in sections 42D(1) and 42F must be treated as references to the single entity.

“42D Meaning of large and medium size

• “(1) In section 42C,—

  • “(a) a charitable entity is large in respect of an accounting period if, in each of the 2 preceding accounting periods of the entity, the total operating expenditure of the entity and all entities it controls (if any) is $1 million or more:

  • “(b) a charitable entity is of medium size in respect of an accounting period if—

    • “(i) it is not large under paragraph (a); and

    • “(ii) in each of the 2 preceding accounting periods of the entity, the total operating expenditure of the entity and all entities it controls (if any) is $500,000 or more:

  • “(c) qualified auditor has the same meaning as in section 35 of the Financial Reporting Act 2013.

  “(2) A financial reporting standard (within the meaning of the Financial Reporting Act 2013), or a part of such a standard, that is expressed as applying for the purposes of subsection (1)(a) or (b) must be applied in determining whether that provision applies (for example, the standard may define operating expenditure or control).

“42E Offence relating to audit or review

• If a charitable entity fails to comply with section 42C, the charitable entity commits an offence and is liable on conviction to a fine not exceeding $50,000.

“42F Audit or review must be carried out in accordance with auditing and assurance standards

• “(1) An auditor must, in carrying out an audit or a review of the financial statements of a charitable entity, comply with all applicable auditing and assurance standards.

  “(2) The auditor's report must comply with the requirements of all applicable auditing and assurance standards.

  “(3) This section does not apply in respect of a charitable entity that is a public entity (within the meaning of the Public Audit Act 2001).

  “(4) In this section, applicable auditing and assurance standards has the same meaning as in section 5 of the Financial Reporting Act 2013.”

• “(1C) If terms and conditions referred to in subsection (1A) relate to the financial statements of an entity, those terms and conditions must be treated as including a requirement for the financial statements to disclose, in the statement of accounting policies section, a brief description of the terms and conditions that apply under subsection (1A).”