A quick guide to your accounting and audit responsibilities as a charity or non-profit organisation

The Charity Commission for England and Wales sets out a number of guidelines that charities, non-profits and charitable trusts are required to adhere to, and we’ve endeavoured to make these easier to digest by offering our own bitesize guide. 

Working out what accounting responsibilities apply to your charity or non-profit

There is a legal requirement for all charities and non-profits to keep accounting records and prepare annual accounts which must be made available to the public on request.

The main criteria for the type of account that needs preparation depends on the structure and income for your charity or non-profit:

Income under £250,000 – Receipts and payments account which is simpler contains a statement summarising all money received and paid out by the charity in the financial year, and a statement giving details of its assets and liabilities at the end of the year.

Income over £250,000 – An accruals account becomes mandatory and is a more detailed type of financial reporting that provides a “true and fair view” of your finances. The accounts must follow the rules set out in the Statement of Recommended Practice (SORP) and typically include a statement of financial activities and explanatory notes.

Your annual return requirements

Charitable Incorporated Organisations (CIOs) and other registered charities with a gross annual income over £10,000 must complete and file an annual return. Unregistered charities (typically those with a lower income) are not normally required to prepare formal annual reports but may choose to do so for transparency and accountability purposes. 

The annual report should contain information about your activities, finances and governance during the year. The level of detail required varies depending on your charity or non-profit’s size and structure and different financial thresholds can determine additional requirements – you can find the specific thresholds and requirements  here 

Independent examination vs audit requirements

When you need an independent examination

If your income is more than £25,000, an independent examination is required. This applies to charities and non-profits with annual gross income between £25,000 and £1 million. 

When you need a full audit

If your gross income for the year is greater than £1 million, or gross assets are more than £3.26 million and income of more than £250,000, then an audit is required. A statutory audit must be carried out by a registered auditor.

What to send to the Charity Commission

Your submission must include your annual accounts (receipts and payments or accruals accounts) and trustees’ annual report. If you require an independent examination or audit, you must also submit the examiner’s or auditor’s report.

Submission deadlines

You need to submit your annual return within 10 months of the end of your financial year. This deadline applies to both your annual return and accounts submission. Late submissions can result in regulatory action and may affect your reputation with funders and supporters.

What documents to include

Your submission checklist should include::

• A completed annual return form 
• An annual accounts prepared in the correct format for your income level
• The trustees’ annual report containing all required information about your activities and finances.
• An independent examiner’s report or auditor’s report (if thresholds are met).

Before submission, ensure your accounts are signed and dated by the appropriate trustees and that your independent examiner or auditor has completed their work and all figures in your annual return match those in your accounts.

Practical steps to stay compliant

Try to maintain accurate accounting records throughout the year rather than compiling everything at your end of year. Be sure to keep your Charity Commission registration details current and book your examiner or auditor at least 6 months in advance.

Staying informed about changes to charity accounting requirements through any updates with The Charity Commission and taking on professional advice when needed can help you stay compliant.

Getting help and support

The Charity Commission provides guidance through their website and helpline. Professional advice from qualified accountants with charity experience can also be beneficial for helping to manage your accounting and audit responsibilities.