Guidance for trustees & finance officers
A plain-English guide to charity accounts,what they must contain, which format applies to your charity, and what happens at year end.
The basics
Every registered charity in England and Wales is legally required to prepare annual accounts and make them available to the public. These accounts provide a financial record of the charity's activities during the year,its income, expenditure, assets and liabilities,and must be accompanied by a Trustees' Annual Report.
Unlike company accounts, charity accounts are governed by the Charities Act 2011 and must comply with the Charities Statement of Recommended Practice,commonly known as the Charities SORP. The SORP sets out how charities should present their financial information, and compliance is a requirement for all but the smallest charities.
"Good charity accounts aren't just a compliance exercise,they're a window into your charity's health and a vital tool for building trust with donors, funders and beneficiaries."
The format and level of detail required in your charity's accounts depends primarily on your gross annual income and whether your charity is incorporated. IEL prepares charity accounts for charities of all sizes across England and Wales, always in full compliance with the relevant SORP and regulatory requirements.
Which format applies to you?
The format your charity must use depends on its income level and legal structure. Here's how it works.
Simpler format
Under £250,000 gross incomeThe simpler of the two formats, receipts and payments accounts record cash coming in and going out during the year, along with a statement of assets and liabilities at the year end.
Available to unincorporated charities (those that are not a charitable company or CIO) with gross income below £250,000. Straightforward to prepare, and well suited to smaller charities with uncomplicated finances.
Even at this level, an independent examination is required once income exceeds £25,000.
Full SORP-compliant format
Over £250,000, or incorporatedAccruals accounts present a fuller picture of the charity's finances, recognising income and expenditure when it is earned or incurred rather than when cash changes hands.
Required for all incorporated charities (charitable companies and CIOs) regardless of income, and for unincorporated charities with gross income over £250,000. Must comply in full with the Charities SORP (FRS 102).
IEL prepares accruals accounts to SORP standard for charities across the income range,from those just crossing the £250k threshold to those approaching the £1 million audit threshold.
Inside the accounts
Each component of the accounts serves a specific purpose. Here's what each element covers and why it matters.
A narrative report from the trustees covering the charity's purposes, activities, achievements and plans. Required by law and must be consistent with the financial statements. Often underestimated,but for grant funders it's frequently the most-read section.
Shows all incoming resources and expenditure during the year, analysed by fund type (unrestricted, restricted, endowment). The SOFA is the charity equivalent of a profit and loss account, presented in a format specific to the sector.
A snapshot of the charity's financial position at the year end,assets, liabilities and fund balances. Trustees must approve and sign the balance sheet, confirming it gives a true and fair view of the charity's financial position.
Detailed supporting information explaining the figures in the accounts,accounting policies, breakdown of income and expenditure, details of restricted funds, trustee expenses, related party transactions and more.
Required once income exceeds £25,000. The examiner confirms whether anything has come to light suggesting the accounts are incorrect or that proper records haven't been kept. For most charities, this replaces the need for a full audit.
Charities must distinguish between unrestricted funds (available for general use), restricted funds (donated for a specific purpose) and endowment funds. Keeping these clearly separated is a key compliance requirement and often where errors occur.
Don't miss your deadline
Missing your Charity Commission filing deadline can result in your charity being flagged as overdue,visible to the public on the register. Here's what you need to know.
Must submit accounts to the Charity Commission within 10 months of their financial year end. For example, a 31 March year end means a 31 January deadline.
Must file with both the Charity Commission and Companies House. The Companies House deadline is 9 months from year end. Both filings must be made,missing either counts as an overdue return.
We recommend providing records to IEL as soon as possible after your year end,ideally within 2 to 3 months. This gives time to resolve queries without deadline pressure, and avoids the autumn backlog.
Common questions
Let us take care of it
IEL prepares year-end charity accounts for charities across England and Wales,from simple receipts and payments to full SORP-compliant accruals accounts. Fixed fees, no surprises.
Or email us at info@iel.org.uk · We aim to respond within one working day
