Charities and Not-For-Profit Organisations Accounting

Charities and Not-For-Profit Organisations Accounting

Charity accounting:

By law, every charity must prepare a set of accounts and a trustees’ annual report.

Accounts and reports aim to provide a clear picture of your charity’s activities and financial position. The trustees’ annual report is also an opportunity to describe your work to the public and to funding bodies.

If your charity is a limited company by guarantee, you also need to submit the accounts to Companies house and a corporation tax return CT600 and Supplementary pages CT600E: charities and community amateur sports clubs to HMRC.

Independent examination of accounts

This is the process of scrutinising a charity’s accounts below the level of a professional audit. The procedures are defined by law and by the Directions of the Charity Commission. The independent examiner will gain an understanding of the charity, look at the accounts and supporting documents and write an independent report to accompany the accounts and trustees’ annual report.

The duty of the independent examiner is to give what is called ‘negative assurance’. After looking at the evidence the examiner reports whether or not certain matters “have come to my attention”. These include lack of accounting records and the failure of accounts to comply with the Charities Act. As well as scrutinising the accounts, the independent examiner may also help prepare the accounts in the format required and help prepare the trustees’ annual report.

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