There are different types of banks and building societies:
|High street banks/building societies
Every charity needs to keep careful accounting records of how much money has come into the organisation, where it has come from, what it is for and how it has been spent. This can all be done online – either with the help of various software programmes or just a simple excel spreadsheet.
The Charity Commission allows some charities (unincorporated charities with an income less than £250,000) to keep a simple ‘receipts and payments account’ (R&P). This is a simple statement of ins and outs during the year, with any balance or deficit from the previous year brought in at the beginning.
All companies (incorporated charities) such as CIO’s must keep an ‘income and expenditure’, or ‘accruals’ account. This is based on the R&P but will need to include a ‘balance sheet’ which sets out the charity’s assets (what it owns or is owed) and liabilities (what it owes), plus a statement of financial activities and explanatory notes.
Charities are required, by law, to submit an annual report and accounts to the Charity Commission. Trustees are responsible for making sure that this is done and that the charity’s assets are only used to support or carry out its purposes.
Each registered charity receives an annual return form from the Charity Commission shortly after its financial year end. In all cases, the annual return should be completed online.
|Legal requirements – Unincorporated Associations
Those with an annual turnover of less than £10,000 must keep proper financial records but do not need to submit them to the Charity Commission. They do have to submit an annual update of gross income and expenditure and any change of details of the charity or the trustees.
Those with an annual turnover of more than £10,000 must submit their annual financial situation to the Charity Commission.
Those with an annual turnover of more than £25,000 must have their accounts independently examined and submit them to the Charity Commission.
Unincorporated charities with an income of less than £250,000 can submit a simple ‘receipts and payments’ account.
|Legal requirements – Charitable Incorporated Organisations (CIOs)
All Charitable Incorporated Organisations (CIOs) must submit annual accounts to the Charity Commission, even if their income is zero.
The accounts must be in an income and expenditure (accruals) format with a balance sheet, a statement of financial activities and explanatory notes.
But the accounts don’t need to be independently examined until your charity’s annual income is more than £25,000
|The independent examiner:
NCVO’s legal compliance checklist contains a list of legal requirements that need to be covered by most charities and voluntary organisations.