Charities Accounting and Reporting Guidelines
Charities are required to follow specific accounting and reporting provisions outlined in the Charities Act 2009. These guidelines cover duties such as keeping proper books of account, annual financial statements, audits, and annual reports. Regulations also specify the format of accounts, audit requirements, and reporting obligations for different sizes of charities. Larger charities must prepare comprehensive financial statements, while smaller charities have the option for simplified accounts. The goal is to enhance trust, transparency, and accountability in the charitable sector.
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Presentation Transcript
Tom Malone FCCA Head of Compliance Eamon O Halloran Head of Registration The Charities Regulator 2016
Role of annual accounts/reporting CR Charities need to Functions Increase public trust and confidence Build trust Accounting & Reporting Provide more information Ensure accountability of charities to donors and the public Be more transparent
Background Charities Act 2009 accounting and reporting provisions: S.47 Duty to keep proper books of account S.48 Annual statement of accounts S.50 Annual audit or examination of accounts S.51 Regulations in relation to audits/examinations S.52 Annual reports
Regulations What do they cover Format of accounts for registered charities Audit or independent examination requirements Format of annual reports for registered charities Provision of information to the Charities Regulator
Scope As currently proposed: Regulations on accounts and audits will apply to all charities except: o Company charities o Education charities o Very small charities Regulation on accounts and audits set different requirements for larger and smaller charities. Regulation on annual reporting requirements will apply to all charities.
Accounts of larger charities Annual statement of accounts consisting of: Statement of financial activities Balance sheet Cash flow statement Notes to the accounts Must be prepared in accordance with the applicable Financial Reporting Standards and the methods and principles of the applicable Statement of Recommended Practice.
Accounts of smaller charities Charities with gross income or expenditure of less than 100,000 have the option to prepare simplified accounts consisting of: Statement of receipts and payments 1. Statement of assets and liabilities Notes to the accounts Format will be set out in a schedule to the Regulations 2. 3. The simplified accounts option cannot be used if the charity is required to prepare accruals accounts by any of the following: Its constitution Any other enactment A decision of the charity trustees o o o
Consolidated accounts Consolidated accounts are required where aggregate gross income of a charity and its subsidiaries is over 500,000. A subsidiary is an entity (charitable or non-charitable) controlled by the parent. i.e. The parent has the power to govern the financial and operating policies of the subsidiary so as to obtain benefits from its activities. Charitable subsidiaries are required to prepare their own accounts under the regulations (unless exempt).
Audit Audit threshold - 100,000 Accounts must be audited where the gross income or expenditure exceeds the threshold o In the financial year, or o In either of the two preceding financial years, or o Where an audit is required by The charity s constitution Any other enactment A decision of the charity trustees Duties of the auditor and format/content of the auditor s report specified in the Regulations.
Independent Examination Where accounts are not required to be audited, they must be independently reviewed. Independent Reviewer of Charity Accounts: o An independent person who, in the reasonable opinion of the Charity Trustees, has the requisite ability and practical experience to carry out a competent review of the accounts. o If on an accrual basis reviewer must be a member of a relevant professional body. Format/content of independent reviewer s report specified in the regulations.
Annual Report All registered charities must make an Annual Report (return). Regulations codify the requirements in legislation. Online report signed by two charity trustees. (Declaration) All reports & accounts will be published on Charities Register. One Click Transparency (donors, beneficiaries, citizens). Filing accurate, complete annual report on time is the minimum standard. Format and contents of annual report are proportionate.
Annual Report Charities under 10,000 minimal information Charities over 10,000 additional information, including on Reserves Policy ; Explanation of deficit. Charities over audit threshold additional information, including on: Appointment of charity trustees; Donated goods and services; Risks and risk management; planned objectives for the year ahead. Charities not required to supply accounts to us must provide: A financial summary content specified in Schedule 2 to Regulations unless already included in Accounts. (forces transparency on charities filing abridged accounts with CRO 20% in 2016).
