The financial reporting requirements applying to charities vary depending on their legal form. A charity may be
- Unincorporated and set up under a trust deed or constitution
- A registered company under the Companies Acts
- Incorporated by Royal Charter or under other legislation such as the Industrial and Provident Societies Acts
- Incorporated under the Charities Act 2011 – a Charitable Incorporated Organisation (CIO) available from December 2012.
A charity with a gross income of over £5,000 must register with the Charities Commission. All charities with an income over £25,000 must file financial statements with the Charities Commission within 10 months of the year end. Charitable companies set up under the Companies Act are also required to file their accounts with Companies House within 9 months of the year end. The new CIOs benefit from incorporation status but are only required to deliver one set of financial statements complying with charity law with the Charities Commission rather than with Companies House under company law as well.
The accounting requirements under charity law for registered unincorporated charities vary according to their size as follows:
| Gross income | Accounts format | Report on the accounts |
| Under £25,000 | R&P | None |
| £25,000 - £250,000 | R&P | Independent examination report (no qualification required of examiner) |
| £250,001 - £500,000 and gross assets under £3.26m | Acc | Independent examination report by a qualified examiner |
| £250,001 - £500,000 and gross assets over £3.26m | Acc | Audit |
| Over £500,000 | Acc | Audit |
NOTES: R&P = Receipts and payments, Acc = Accruals accounts
However, the trust deed or constitution or a donor to the charity may require that the accounts are examined by an independent person or that a full audit is required.
Receipts and payments accounts are drawn up on the basis of total money received and paid out. A statement of assets held and liabilities owed is included.
Accrual accounts are drawn up on the basis of income being earned and expenses incurred regardless of the date of receipt and payment. Accruals accounts should give a true and fair view and need to follow the guidelines set out in the Statement of Recommended Practice Accounting and Reporting by Charities 2005 which details disclosure and accounting treatment.
Templates packs can be downloaded and more information obtained from the Charities Commission website as follows:
In addition a Trustee Report will be required and a template can be downloaded from the links above.
The requirements for charitable companies incorporated under the Companies Acts will be dealt with in a separate article next month.
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