Community accounting, management and research services
For most charities, accounts will work at three levels of detail.
The Books or the accounting records A record of all transactions. Must show the financial position of the charity at any time and be kept for six years. Must be seen by the charities auditor or independent examiner – otherwise for internal use only.
Interim report or Management accounts Typically reports for trustees or key members of staff to monitor progress and take financial decisions. These will not usually show individual transactions but summarise figures for a period of time (less than a year and often monthly or quarterly). They may show actual against budgets and possibly future projections. For internal use only.
Published year end accounts or Financial statements or Annual accounts All charities, no matter how small, must produce published accounts, which must be approved by the trustees. The published accounts must include a report by an auditor or independent examiner (unless the charity’s income is less than £25,000 in England and Wales). The annual accounts should always be circulated with the annual report. They are a public document. Anyone can ask for a copy.
Legal framework Charity accounts are governed extensively by law. I most respects the rules governing charity accounting are more extensive than those for commercial accounts: this is because charities are entrusted with other people’s money and have a duty to se those funds for public benefit. The basis of charity accounting law is as follows:-
Charities and Trustee Investment (Scotland) Act 2005
Charities Accounts (Scotland) Regulations 2006
Charities SORP (please see below)
Guidance from OSCR (helpful but does not have the force of the law)
The Charities SORP Statement of Recommended Practice on Accounting and Reporting by Charities. This is published by OSCR in Scotland with approval by the Financial Reporting Council. The SORP applies to all charities across the UK.