Meet our Expert
Nigel Scott has worked in the not-for-profit sector for 23 years, first as a Director of Finance but for the last 8 years he has been Course Director of London South Bank University’s specialist postgraduate Courses in Civil Society Management, both Financial and General. He has been a Trustee of many organisations including Charity Finance Group and Charities Evaluation Services.
“We are just coming to the end of our first full year and need to prepare our accounts. We will need to outsource this project to an accountancy practice, but we are not sure where to start or what information they will expect. Can you help?”
First of all you need to be clear about what accounts are needed for your organisation. All registered charities should prepare annual accounts and if your gross income was greater than £25,000 then you are required by law to file them with the Charity Commission. If your gross income is less than £250,000 then you can prepare Receipts & Payments Accounts and the best way to do that is to use the Charity Commission Receipts & Payments accounts pack (CC16). If your gross income is greater than £250,000 then you will need to prepare Accruals Accounts and there you may need assistance from an accountancy practice. If you’re going to seek that support make sure the practice you approach has obvious experience in charity accounting as there are requirements for charities over and above those required of companies. The accountant will need details of all transactions during the period, your budget for the period completed and the next period, details of any fixed assets you have purchased, all staff contracts, Gift Aid documentation and any agreements with donors or funders.
Depending on the level of gross income you will also need to decide whether you need an Independent Examination (up to £500,000) or an Audit (over £500,000). Although some Independent Examiners or Auditors will prepare accounts and carry out the Examination, best practice suggests that the two roles are split, however, cost considerations will play a part in your decision.
It is worth bearing in mind that under Part 8 the Charities Act 2011, it is a requirement that Trustees maintain accounting records such that the charity can demonstrate its financial position at any time, not just at the end of the financial year. Looking ahead you should consider investing in an accounting software to maintain your records and to automate both the maintenance of your records and the production of your future annual accounts.