Charity Accounts

The Charity Commission states that all charities have to prepare annual accounts, and all registered charities must, and all charities should, prepare a trustees' report. There is guidance as to how you could prepare your accounts on the Charity Commission website, which depends upon your financial year:

Non-company charities with an income £250,000 or less

Non-company charities with an income £250,000 or less, may be able to prepare receipts and payments accounts that provide a simple and flexible basis for accounts preparation, for financial years ending on or after 1 April 2009. However, for earlier years, ending before 1 April 2009, the threshold is lower at an income of £100,000, above which accrual accounts must be prepared.

Statement of Recommended Practice (SORP) 2005

The Statement of Recommended Practice (SORP) provides guidance to charities in the UK on the preparation of accruals accounts and the preparation of Trustees' Annual Reports. It is a comprehensive summary of how accounting standards, charity law, relevant company law and best practice impacts on the preparation of charity accounts and reports.

In addition to the Trustees' Annual Report, you must prepare the Statement of Financial Activities (SoFA), which provides the analysis of incoming resources by activity into voluntary income, operating activities for generating funds and investment income, which are matched by a similar breakdown of resources expended based on charitable, fundraising and governance activity groups.

Then a balance sheet with the related notes has to be prepared, which is a standard accounting document that is produced to show the overall financial state of an organisation.