Financial reporting for charities is a complex area, with frequent changes to the reporting and regulatory requirements. As well as the Statement of Recommended Practice : Accounting and Reporting by Charities (issued in March 2005) and Charities Act 2006, many charities need to ensure they also comply with the Companies Act 2006 and Financial Reporting Standard for Smaller Entities (effective April 2008).
The format of accounts and reports for charities is very different from reporting for other entities. The distinct regulations and requirements placed on charities are strict and various.
One of the most important regulatory changes is the recent introduction of public benefit reporting, which requires the charity to clearly demonstrate the public benefit it provides in order to justify its charitable status. The Charity Commission have investigated a number of registered charities on this issue and therefore care should be taken to ensure the annual reports produced by the charity clearly demonstrate the public benefit the charity provides.
Most charities use accounting systems such as Sage or Quickbooks. These are eminently suitable systems, but charities often fail to use them to full advantage. We advise clients on the best way to get the most from their investment in software.
We also assist charity clients with the completion of the charity's Annual Return to the Charity Commission and Companies House where applicable.