Year End Accounts - FAQs
Do I need to create year-end accounts?
What type of accounts do I need to create?
Receipts & Payments (cash) Accounts
See this article: Creating End of Year Accounts (R&P)
Charities in the UK with an annual income below £250,000, will often be able to prepare simple Receipts & Payments accounts (as long as they are not charitable companies). Receipts & Payments accounts are a simple form of accounting that consists of a summary of all monies received and paid via the bank and in cash by the charity during its financial year, along with a statement of balances.
The template for creating Receipts and Payments accounts can be found on the ***UK Charity Commission website here***. Typically, you just need to enter a summary of your income for the year in section A1, a summary of Expenditure for the year in section A3, and your balance sheet totals in section B1.
Accruals Based Accounts
See this article: Creating End of Year Accounts (Accruals)
Charities with annual income over £250,000, or that are charitable companies, will need to prepare accounts on an accruals basis that comply with the Charities SORP. Accounts prepared using the accruals basis allocate the costs or income of a particular activity according to when the liability is incurred, or when there is entitlement or certainty about income. This is not necessarily the date on which money is received or paid out.
Charities should carefully check what type of accounts they need to prepare and we recommend that you speak to your Independent Examiner to make sure.
Click here to find out more about the difference between accounting on a receipts & payments and an accruals basis.
Can I create my own accounts?
Yes, however preparing accounts that comply with the Charities SORP can sometimes become quite complicated and you may well need help from someone who is familiar with the Charities SORP (such as your Independent Examiner).
Preparing year-end accounts, on an accruals basis, involves much more than just taking financial reports from your accounting software and writing a trustee's report. Numerous legal disclosures have to be included in order to comply with the Charities SORP.
Will I need my accounts to be independently examined?
If the gross yearly income of your charity is over £25,000, then you will need your accounts to be independently examined.
Top Tip: Whilst the creation of year-end accounts and the independent examination of year-end accounts are two separate tasks, typically most charities pay an Independent Examiner to take care of both tasks. We can recommend Stewardship or Wyatt & Co.
How accurate do my accounts need to be?
Your accounts need to provide an accurate record of your charity's finances.
However, within accounting, there is the concept of materiality - here is an extract from the Charities Commission website:
This blog article explains more about materiality in charity accounting.
What do I do with my signed-off year-end accounts?
Once your accounts are completed, you need to submit them to the Charity Commission (and Companies House too if your charity is a charitable company). Signed-off accounts must be submitted within 10 months of each financial year-end to the Charity Commission, and within 9 months to Companies House, if applicable.
Can I adjust my financial year?
If you wish to adjust your charity's financial year dates (e.g. because your financial year start date isn't the 1st of a month) then this is easy to do within the Charity Commission Online Portal (and then within the system settings screen in ExpensePlus).
See this article: Changing your financial year date in ExpensePlus