Year End Accounts (Accruals) - Trustees Report
This support article gives guidance on how to complete the 'Trustees Report' section of your Year End Accounts. For information on completing other sections of the Year End Accounts, please see these further support articles:
This article is only applicable to churches and charities that create accounts on an accruals basis.
In this article:
A few important notes
Before creating accounts, you must complete all of the year-end checks needed to ensure the financial data in your accounts is correct - find out more.
If you have any questions about completing any of the fields within this section, you will need to contact your Independent Examiner. While our support team is always happy to help with software-related questions, accounting questions need to go to your Independent Examiner.
ExpensePlus does not provide advice on how to create accounts, and it is each organisation's own responsibility to ensure that their charity accounts comply with the law, taking professional advice as necessary.
Where do I add the Trustees Report in ExpensePlus?
To find the Trustees Report section of your year end accounts, in the ExpensePlus sidebar menu, scroll down to the Accounting section and click 'Year End Accounts'.
What should I include in each section of the Trustees Report?
Objects of the Charity
Charity objects, which define a charity's purpose, are found in its governing document (constitution, trust deed, or articles of association).
These are publicly available on the Charity Commission register for England and Wales, or via Companies House for incorporated charities.
Summary of the charity's main activities and achievements
This is a key section of the Trustees’ Annual Report, designed to explain to the public, donors, and regulators how the charity has used its resources to further its charitable purposes.
It should highlight the difference the charity's work has made to its beneficiaries and outline the significant actions taken during the financial year.
You don't need to include every single activity, but try to cover a wide range of activities in which the charity is involved and, even more importantly, the ways that these activities have positively impacted the beneficiaries.
As well as covering the achievements of the charity over the past year, you may also wish to include any plans the charity has for the future.
Think of your audience as you write about your charity's main activities and achievements, and try to make it a compelling narrative (without being overly long).
Large charities must also disclose:
- The charity's aims: what issues is the charity trying to tackle or what difference is it trying to make?
- How the achievement of the above aims will further the charity's legal purposes.
- Its strategies for achieving its stated aims and objectives.
- The criteria it uses to measure success in the reporting period.
- The significant activities undertaken, explaining how they contribute to the achievement of stated aims and objectives.
- The achievements against the objectives set.
- The use of grant-making (where material), along with grant-making policies that explain how grant-making contributes to the achievement of the stated aims and objectives of the charity.
- Where material, a large charity must explain its social investment policies and explain how they contributed to the achievement of the stated aims and objectives.
If you are unsure where to begin, you could look at the accounts of similar charities on the Charity Commission's website. We wouldn't recommend that you copy what another charity has written, but it may give you ideas.
Structure, Governance and Management
This section should detail those responsible for setting policy, determining the parameters within which the charity should operate, and making operational decisions (typically the charity trustees). For example:
- The trustees are responsible for setting policy, determining the parameters within which the charity should operate, and making operational decisions. The trustees meet regularly to monitor the activities of the charities.
This section should also detail those responsible for the day-to-day operations of the charity. For example:
- Responsibility for the day-to-day operations of the charity has been delegated to the senior management team, which includes [the eldership team and operations manager].
This section should also detail how new trustees are recruited and appointed. For example:
- New trustees are recruited and appointed [by the existing trustees, by a majority vote].
Large charities must also disclose:
- The charity's organisational structure.
- How the charity makes decisions (e.g. which decisions are delegated to staff and which are reserved for trustees).
- Policies and procedures for inducting and training trustees.
- Arrangements for setting pay for key management, and any benchmarks / parameters or criteria used.
- If part of a wider network, how this impacts (if at all) on the charity's operating policies
- Relationships between the charity and related parties and with any other organisations with which the charity co-operates in pursuit of its objectives.
Financial Review
This section should include a summary of the charity's finances. For example:
- During the year, income increased by £XX, to £XX, and expenditure decreased by £XX, to £XX. As a result, surplus for the year increased by £XX, to £XX. The charity's net assets increased to £XX
Large charities must also comment on:
- Significant events that have affected financial performance and position.
- The financial effect of any significant events.
- Principal sources of funding and how these resources supported the charity's key objectives.
- The performance of material fundraising activities against the fundraising objectives set.
- Details of any material expenditure to raise income in the future.
Funds in Deficit (if applicable)
Where no funds are in deficit, you can simply state this. For example:
- No funds have been in deficit
Where funds are in deficit, the charity must list these and explain how the deficit arose and the steps being taken to eliminate this.
Typically, any funds in deficit are identified in your year end checks, and fixed by either a fund transfer or by re-coding expenditure. Therefore, by the time you create accounts, typically, no funds will need to be disclosed as being in deficit.
Investments Policy (if applicable)
Where a charity has an investment policy, this should be stated in this section. For many charities, this section can be left blank.
Large charities must comment on:
- Investment policy and objectives set.
- Investment performance against the investment objectives set.
Reserves Policy
Every charity should have a reserves policy, and this should be stated within this section, along with a statement as to whether your charity currently holds the level of reserves set out within its reserves policy. For example:
- The trustees have determined that the charity should aim to hold unrestricted cash of no less than £XX (which equates to about XX months' of unrestricted expenditure) so that the charity could continue to operate should income and / or expenditure vary adversely.
- At the year end, the charity held unrestricted cash of £XX and the charity is complying with its reserves policy.
Responsibilities of Trustees under Charity Law
Typically, a statement like the one below is included within this section:
The trustees are responsible for preparing the trustees' annual report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Charity law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the charity as at the balance sheet date, and of its incoming resources and application of resources, including income and expenditure, for the financial year. In preparing these financial statements, the trustees are required to:
- select suitable accounting policies and apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgments and estimates that are reasonable and prudent;
- state whether the applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the charity will continue in operation.
The trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 2011 and the Charity (Accounts and Reports) Regulations 2008. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
To find answers to other Frequently Asked Questions relating to Year End Accounts check out this help guide article.
You may also want to read our blog article 'What makes a good Trustees’ Annual Report?'