Charities: Time to get your house in order?

It goes without saying that it is an incredibly busy time of year for many charities in the South West, as they get all their information together ready to send across to their accountant or independent examiner.

As the year-end has recently passed for a significant number of charitable organisations, there is often a lot to remember, especially if your charity is subject to an independent examination or an audit.

Perhaps one of the most important things is to make sure your accounting records are complete and up to date, whether on the cloud-based software you are using or on spreadsheets.

As well as this, if you do have to undergo an independent examination or an audit, we have put together a list of the top five additional pieces of information that will be required for us to help make the process a little bit smoother all round:

Trustee meeting minutes

A key part of our work will be reviewing the minutes of trustee meetings held throughout the year and after year-end. The reason for this is that we can then identify if there are any events which may be significant for your charity which are not necessarily reflected in the figures.

This helps us to get a better understanding of the events as they happened throughout the year. We also like to review the post year-end minutes, as part of our assurance work, so that we can also identify any post year-end balance sheet events that we may need to disclose.

Funds analysis

If your charity receives funding which is for a specific purpose, for example, restricted for this use only, then it is helpful for charities to monitor and review this, and to make sure that any expenditure relating to that restriction is allocated accordingly.

Sometimes it can be difficult to decide whether an amount of money should be restricted or not, and of course it will very much depend on the wording of the document. However, if money is given for a specific project, then this will be classed as restricted income.

Trustees Annual Report

Although you may need the draft accounts for the financial review section to be completed, it is always worth thinking about what you want to include in your annual report at the year-end. This is very much the charity’s opportunity to really sell itself and to highlight some of its big achievements over the last year and how it has supported its beneficiaries. Many charities will also include feedback from those that they have supported to demonstrate the valuable work they have completed.

There are some set criteria for what a Trustees Annual Report should include, and these are:

  • The structure and details of how the charity is managed, including how it recruits trustees.
  • The objectives and activities undertaken in the year.
  • Any achievements in the year and overall performance, including reporting on the public benefit.
  • And the financial review, including any debts and details of your reserves policy (all charities should have a reserves policy for continued operations).

A Trustees Annual Report should always be clear and concise but include all relevant information, as sometimes the report will be the only thing that people will read about the charity’s accounts.

Income documentation and purchase invoices

Part of our assurance work will include testing a sample of the charity’s income and expenditure transactions through the year. The required level of testing will vary depending on the size and the number of these transactions, but it is crucial that charities keep all relevant documentation for their income and expenditure.

As most charities use an element of public money for their operations, there is generally a higher level of scrutiny required in how they spend the money that they have received than for a commercial company.

Bank statements

We will need bank statements for the year and post year-end – part of our review will include looking at the transactions that go through the charity’s bank account throughout the year. We will also need to confirm that the closing balance on the bank statements reconciles with the accounts, after all the items have been considered.

We also like to review the post year-end bank statements to make sure that any balances held in the charity’s debtors or creditors control accounts are received/paid post year-end. Another part of this review is to identify any after-date transactions that should be included in the accounts.

In summary, the main thing to remember is that preparation is key! – if you prepare all your documents in advance and get all the information together in plenty of time, it will make the process much smoother all-round.

It can often be quite stressful having to go through the minute details and making sure you have everything covered, but we are here to guide you through the process and give you plenty of help and advice along the way. If you would like to speak to a member of our charities team about your year-end requirements, then please get in touch.

Written By Manager, Kerry Tyas

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