Audit Under the Trust Act

Q: Are all trusts required to undergo an audit?

Audit requirements typically depend on income level and exemption status. Trusts seeking tax exemption are generally required to have accounts audited once income exceeds the prescribed threshold.

Q: What is meant by income application for trusts?

Income application refers to the requirement that a trust apply a specified proportion of its income towards charitable purposes within a financial year to maintain tax exemption.

Q: Can a trust accumulate income instead of applying it immediately?

Yes, subject to specific conditions, a trust may accumulate a portion of income for application in future years, typically requiring a specific form and use within a prescribed period.

Q: What happens if a trust fails to get its accounts audited?

Failure to comply where applicable can jeopardise the trust's tax exemption status, result in penalties, and raise concerns among donors and regulators.

Reliable Audit Compliance for Charitable and Private Trusts

Trusts, particularly charitable and religious trusts, are subject to audit requirements designed to ensure that funds are used in accordance with the trust deed and applicable law. A properly conducted trust audit verifies the accuracy of accounts, validates that income has been applied for charitable purposes, and supports continued eligibility for tax exemptions.

Our trust audit services cover both the accounting and regulatory dimensions of trust compliance, working alongside our tax audit services and broader audit and assurance offering to give trustees and beneficiaries full confidence in financial reporting.

Our Trust Act Audit Services

Statutory Trust Audit

Conducting the audit required under applicable trust legislation and presenting findings in the prescribed format.

Income Application Review

Verifying that trust income has been applied for charitable or specified purposes as required for tax exemption.

Accumulation Compliance Check

Reviewing compliance with rules on accumulation of unapplied income and related disclosure requirements.

Books of Account Verification

Examining trust books of account, receipts, and payment records for accuracy and completeness.

Donation & Corpus Tracking

Verifying treatment of donations, corpus contributions, and restricted funds in the trust's financial statements.

Exemption Continuity Support

Identifying compliance gaps that could affect the trust's continued tax exemption status.

Our Approach

Reviewing the trust deed and confirming permitted objects and activities
Verifying books of account, vouchers, and supporting documentation
Checking compliance with income application and accumulation provisions
Preparing the trust audit report in the prescribed format
Advising trustees on any compliance gaps identified during the audit

Benefits of a Properly Conducted Trust Audit

Supports continued eligibility for income tax exemption under applicable provisions
Builds donor and beneficiary confidence in the trust's financial management
Identifies compliance gaps before they affect exemption status
Ensures accurate tracking of restricted funds and corpus contributions
Provides trustees with a clear, documented basis for financial decisions
Reduces the risk of penalties for non-compliance with trust regulations

Why Choose Us?

Specialised experience auditing charitable, religious, and private trusts
Strong understanding of income application and exemption requirements
Practical advice for trustees beyond just audit reporting
Coordinated support with tax audit and broader compliance services
Clear, accessible reporting suitable for trustees and beneficiaries alike

Frequently Asked Questions

Are all trusts required to undergo an audit?

Audit requirements for trusts typically depend on the trust's income level and whether it claims tax exemption. Trusts seeking exemption under applicable income tax provisions are generally required to have their accounts audited once income exceeds the prescribed threshold, regardless of the trust's overall size.

What is meant by income application for trusts?

Income application refers to the requirement that a charitable or religious trust must apply a specified proportion of its income towards its stated charitable purposes within a given financial year to maintain its tax exemption. Failure to meet this requirement can result in the unapplied income becoming taxable.

Can a trust accumulate income instead of applying it immediately?

Yes, subject to specific conditions and procedural requirements, a trust may accumulate a portion of its income for application in future years. This typically requires filing a specific form and using the accumulated funds within a prescribed period for the stated purpose.

What happens if a trust fails to get its accounts audited?

Failure to comply with audit requirements where applicable can jeopardise the trust's tax exemption status and may result in penalties. It can also raise concerns among donors and regulatory authorities about the trust's governance and financial management.

Is the trust audit different from the regular statutory audit?

The trust audit incorporates additional verification specific to trusts, such as income application, accumulation compliance, and adherence to the trust deed, beyond the standard examination of financial statements conducted in a typical statutory audit.

Keep Your Trust Compliant and Exemption-Ready

Specialised trust audit services that protect your tax exemption and donor confidence.