Accounting for charities: accounts, reports and returns

May 17, 2019

Completing a set of charity accounts and filing them each year can feel like a familiar chore for many people involved with running a charity.

However, it may come as a surprise to learn that around 3 in 10 of those accounts do not meet a basic level of reporting standards.

This is according to a review by the Charity Commission, which found that only 70% of trustees’ annual reports and accounts meet the basic benchmark for public benefit reporting requirements.

The Commission said the remaining 30% fell short for two main reasons, including a failure to prove the accounts had been independently scrutinised, and not giving meaningful information about their charity’s purposes.

The rules around charity accounting and reporting are complex, with different requirements depending on the type of organisation, its income, and the value of its assets.

We’ve set out some of the requirements for charities in England and Wales in brief, but be sure to talk to us to find out what your organisation needs to do.

Charity accounts

All charities, registered or not, are required to prepare accounts and make them available on request.

These could be prepared on the receipts and payments basis or the accruals basis, depending on the income of the charity and whether or not it is a company. If you’re not sure which of these methods you need to use, talk to us for advice.

If you have a gross income of more than £25,000 in the financial year, or if your charity is a company, you’ll also need to file your accounts online with the Charity Commission.

Trustees’ annual report

Charities that are registered in England or Wales need to prepare a trustees’ annual report.

This should include information on the charity’s work, where its money comes from, and how it has spent its money in the past year.

As with charity accounts, the requirements of an annual report will depend on the size and type of charity you run.

In both cases, you also need to report on how you have carried out your charity’s purposes for the benefit of the public.

Large or company charities

If your charity is incorporated, or has an income above £500,000 (or £250,000 if its assets are worth more than £3.26 million), you’ll have to complete a full report.

This needs to follow the statement of recommended practice (SORP) guidelines for accounting and reporting.

You should upload the report as a PDF file when you send your annual return to the Charity Commission.

Small, non-company charities

Charities with an income under £500,000, and assets worth less than £3.26m, can submit a simple report without going into the same level of detail as a full one.

There are still certain minimum requirements for the details you need to include on a simple report, such as details of your charity’s structure and management, trustees, activities, performance and finances.

Annual return

Charities with an income of more than £10,000 a year must complete an annual return and file it with the Charity Commission.

This contains basic financial information for the charity, as well as details on its contacts, trustees, activities and classification.

It’s intended to help the Commission to keep the details of each registered charity as accurate as possible.

Get in touch

As part of our charities service, we can ensure your accounts are prepared to a high standard of quality and detail, including the application of SORP.

We also offer advice on other areas of running a charity, including Gift Aid, VAT, and dealing with HMRC.

Talk to us about how we can help your organisation.

Dick Haffenden

Ready to talk?

Dick Haffenden JCS

Then we’re ready to listen.

Tell us about yourself, your goals and what you need to achieve them and one of our team of friendly accountants will be in touch to begin the conversation.

020 8643 1166

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