Requirements of the Charity Commission
Depending on the size and type of a charity, the Charity Commission will require the trustees to produce an annual report, a set of accounts and an annual return for the financial year.
In order to check which document or documents the trustees must file, the trustees must consider:
- Whether or not the charity is also a company or charitable incorporated organisation
- The charity’s income for the current year
- The value of the charity’s assets, and
- Whether or not the charity is required to be registered as a charity
The trustees should then establish:
- Which type of accounts should be prepared
- What information they need to complete the trustees’ annual report
- Whether the accounts need an independent examination or audit, and
- What information must be filed with the Charity Commission
If the charity is required to file an annual report or accounts, it must do so within ten months of the end of their financial year.
Trustees’ annual reports
All registered charities must prepare a trustees’ annual report and make it available on request.
Each registered charity will receive an annual return notice from the Commission shortly after its financial year-end. Whether or not a charity is required to prepare and file an annual return depends on the gross annual income of the charity. If a charity’s gross annual income exceeds £10,000, the charity must prepare and file an annual return. If the charity’s gross annual income is below £10,000, the charity is only obliged to file an annual return in respect of particular items.
All charitable incorporated organisations must prepare and file an annual return irrespective of their gross income. The annual return should be completed online.
All charities (whether registered or not) must prepare accounts and make them available on request. If a charity is obliged to file the accounts, these may be prepared on the receipts and payments basis, or on the accruals basis. The appropriate basis will depend on the income of the charity and whether or not the charity has been set up as a company.
The receipts and payments basis can be used where a non-company charity has a gross annual income of £250,000 or less. Charitable companies and non-charitable companies with a gross annual income of over £250,000 should prepare accounts on the accruals basis.
Where a charity has a gross income of over £25,000 in a financial year, the charity must have their accounts independently examined or audited. If the charity’s gross annual income is below £25,000, external scrutiny is only necessary if it is required by the charity’s governing documents. The type of external scrutiny required will depend on the income and assets of the charity. Where gross annual income is between £25,000 and £1 million the charity will need an independent examination. Where the gross annual income exceeds £1 million, or total assets (before liabilities) exceed £3.26 million and gross annual income exceeds £250,000 the charity will need an external audit.