Guide to Accountancy for Charities

By law, every charitable company must prepare a set of accounts and a trustees’ annual report. Accounts and reports aim to provide a clear image of your charities activities and financial position. The trustees’ annual report is also where you can show off the work you do to the public and to funding bodies.

These requirements may seem overwhelming to a smaller charity, it doesn’t have to be, and outlining your aims and activities clearly can assist you in managing your finances well, and ensure your organisation is more effective.

What do you need to prepare?

There are a few factors which determine which type of accounts a charity has to prepare.

• Its legal structure
• Its income
• The value of its assets

All Charities

Every charity must keep accounting records (these include cash books, receipts, records of grants, etc, regardless of whether they are register with the Charity Commission or not.

Irrespective of your legal obligations, your charity’s constitution or other governing documents may also require you to send the annual accounts and a trustees’ annual report to members and approve them at an Annual General Meeting (AGM). Even though it isn’t required by law, it is good practice to do this process for your charity.

Annual income of £5,00 to £25,000

If your annual income is above £5000 then you must register with the Charity Commission. A trustees’ annual report must be produced and available on request by every registered charity.

If your annual income is below £10,000 then you must submit an Annual Update to the Charity Commission, which includes changes to the charity’s details, changes to trustee details, plus income and expenditure for the year.

If your annual income is above £10,000 then you must an annual return to the Charity Commission within 10 months of the end of their financial year, which includes information from the annual accounts and trustees’ annual report.

Annual income of £25,000 to £250,000

You must have annual accounts independently examined or audited. These form part of the annual return, which must be submitted to the Charity Commission within 10 months of the end of the financial year with the simplified trustees’ annual report.

Annual income of £250,000 to £1m

You must keep accruals accounts, which must be either audited or independently examined by an individual. This individual has to be a member of a body approved by the Charity Commission. One of these is the ACIE. The accruals accounts form part of the annual returns charity’s must submit, to the Charity Commission, within 10 months after the end of the financial year. A simplified trustees’ annual report must also be submitted alongside you accounts to the Charity Commission.

Annual income over £1m

You must keep accruals accounts, which must be audited. The accruals accounts form part of the annual returns charity’s must submit, to the Charity Commission, within 10 months after the end of the financial year. This must either be submitted with a full trustees’ annual report or an annual income of over £250,000.

Charitable Companies

If you are a charitable company, then you must comply with both charity and company law. This means that you must submit information to the Charity Commission and Companies House. All charitable companies have to keep accruals accounts, irrespective of income or assets.

How Can We Help?

Here at Carrington Blake Accountancy, we offer a wide range of services for charities. Our services range from; bookkeeping, management accounts and reports, charity taxation and VAT, charity gift aid and annual statutory accounts and annual returns.

If you would like to contact us, please call us on 0207 537 6628 or send us an email and we will see how we can help your charity today.