Charity accounting

This page gives you information on how to prepare your charity's accounts and make sure that they are properly scrutinised.  We've also produced guidance and a toolkit to help you get it right.

 It's the law - Accounting Regulations

Remember - it's other people's money that you hold.  It's therefore essential that this is properly accounted for and that the public is reassured.  The Scottish Government has produced accounting regulations that set out how charity accounts must be prepared and checked.  

The Charities Accounts (Scotland) Regulations 2006 set out the format and scrutiny requirements for charity accounts. 

There have been a number of small updates to the Charities Accounts (Scotland) Regulations 2006 and these can be found here.  

Our guidance Scottish Charity Accounts: an updated guide to the 2006 Regulations will help you to understand the Regulations.  

Our Receipts and Payments work pack has guidance, templates and sample accounts to help you prepare your accounts in this format.  It is aimed at smaller non-company charities who may not have the means to employ the services of a professional accountant. 

 You must prepare your charity's accounts in one of two ways, depending on the size of its income, its legal form or how its constitution is worded.

  • Receipts & Payments

Receipts & payments accounts are a simple form of accounting that consist of a summary of all monies received and paid via the bank and in cash by the charity during its financial year, along with a statement of balances.  

This applies to charities with a gross annual income under £250,000 that are not companies, however, if:

  • your charity's constitution says it should prepare accrued accounts
  • your charity's trustees have taken a decision to prepare accrued accounts, or
  • any enactment says that you should prepare accrued accounts,

then you must prepare accrued accounts even if your charity's gross income would otherwise allow accounts to be produced on a receipts & payments basis.

  • Accruals

Accounts prepared using the accruals basis allocate the costs or income of a particular activity according to when the liability is incurred, or when there is entitlement or certainty about income. This is not necessarily the date on which money is received or paid out. 

The Office of the Scottish Charity Regulator and the Charity Commission for England and Wales are the joint SORP-making body for charities, and we have developed two new Charities SORPs for accounting years beginning 1 January 2015.  You can read more and download a full copy here

For accounting periods starting before 1 January 2015, please read the Accounting and Reporting by Charities: Statement of Recommended Practice (the Charities SORP).

To help you get it right, we have produced guidance about charity accounting and our own reporting requirements, Scottish Charity Accounts: an updated guide to the 2006 Regulations. 

This is split into three areas:

Part 1: The Overview should be read alongside either Part 2 or Part 3, depending on the type of accounts your charity prepares.  It has two flow charts to help you see the type of accounts you should prepare, and the type of external scrutiny required.

Part 2: Receipts and Payments accounts. In addition to the guidance, this section has examples of receipts and payments accounts as well as a work pack with templates.

Part 3: Fully Accrued Accounts.

Read our Trustees Annual Reports: Good practice and guidance that explains what a trustees’ annual report is, what the law says it must contain and how you can use it to benefit your charity. 

Read our Incorporation to SCIO: Accounts factsheet for more information on the accounting requirements when incorporating to a SCIO.

Any parent charity where the gross income of the group (the parent charity and its subsidiaries) is £500,000 or more after consolidation adjustments, must prepare group accounts.

However, where a charitable company is required by section 399 of the Companies Act 2006 to prepare group accounts, those group accounts are prepared under the Companies Act 2006, as well as under charity law and the accounting regulations. 

The Office of the Scottish Charity Regulator and the Charity Commission for England and Wales are the joint SORP-making body for charities, and we have developed two new Charities SORPs for accounting years beginning 1 January 2015.  You can read more and download a full copy here

For accounting periods starting before 1 January 2015, please read the Accounting and Reporting by Charities: Statement of Recommended Practice (the SORP 2005) for further details.

Your charity's accounts must be externally scrutinised. That is, someone who is independent of your charity must review the accounts and produce a report, attached to the accounts, that highlights any issues to the reader.

Choosing the right form of external scrutiny

The type of external scrutiny you choose depends on your charity's governing document, gross income and net assets and whether or not your charity is also a company.

To understand what form of external scrutiny is required for your charity's accounts, refer to section 3 and figure 2 within our accounts guidance.

There are two recognised forms of external scrutiny:

Independent examination

An independent examination looks at a charity's accounting records and annual accounts and considers whether the accounts are a fair reflection of the underlying records. It provides a degree of comfort to the reader that the figures in the accounts and the Trustees' Annual Report present an accurate picture of the financial activity of the charity for the accounting period.

Consideration is also made of any unusual items in the accounts that may require further discussion or an explanation from the charity trustees.

Read our Independent Examination guidance for further information.  You can choose to view the guidance in full or read specific sections which have been written with particular groups in mind.


Under the accounting regulations, if the term 'audit' is used in your charity's constitution or governing document, you must have your accounts audited by either:

  • a registered auditor
  • the Auditor General for Scotland
  • an auditor appointed by the Accounts Commission for Scotland (responsible principally for public bodies).

Audits are more commonly required for larger charities, although smaller charities may also have to have an audit if this is stated the in governing document or through a decision made by the charity trustees.

Our guidance for charities and independent examiners sets out the requirements and best practice procedures. This is a large document, but you can download the full guidance or just those sections which are applicable to you.
Full guidance document:

Guidance sections:

Section 1: Introduction (all)
Section 2: How to use this guidance (all)
Section 3: Types of external scrutiny (all)
Section 4: Eligibility for independent examination (all)
Section 5: Who can act as an independent examiner? (charity trustees and independent examiners)
Section 6: How to select and appoint an independent examiner (charity trustees and independent examiners)
Section 7: Preparation for an independent examination (charity trustees)
Section 8: The work of the independent examiner (independent examiners)
Section 9: Whistleblowing - continuing reporting duties for independent examiners (independent examiners)
Section 10: Cross-border charities (charity trustees and independent examiners of cross-border charities only)
Appendix 1: Summary of accounting requirements for Scottish charities
Appendix 2: Receipts & payments accounts
Appendix 3: Fully accrued accounts
Appendix 4: Example independent examiner's reports
Appendix 5: Example letter of appointment
Appendix 6: Glossary of terms
Appendix 7: Sources of advice and support

The example accounts we've published here are intended to show you how to prepare compliant accounts according to various circumstances.  We've included examples that meet the requirements of the two charity Statements of Recommended Practice (SORPs). 

You can find further information on the charity SORPs on the SORP micro site.

Receipts and Payments accounts

Fully Accrued accounts

SCIO accounts

Scottish limited company group accounts prepared under SORP FRS102.

Unincorporated Association accounts 

Scottish limited company group accounts prepared under SORP FRSSE.

Receipts and Payments Workpack

Scottish unincorporated accounts prepared under SORP FRS102.


Scottish unincorporated accounts prepared under SORP FRSSE.


Example accounts for an independent school.


Auditors and Independent Examiners in Scotland, England and Wales and Northern Ireland have a common statutory duty to report matters of material significance to the charity regulators.

OSCR, the Charity Commission for England and Wales and the Charity Commission for Northern Ireland have agreed a common list of matters of material significance to assist the auditor and Independent Examiner in reporting important matters on a timely basis.

The charity regulators have prepared guidance to accompany the common list of matters and auditors and independent examiners should ensure they are fully conversant with the guidance.  

In addition to the duty to report matters of material significance to the charity regulators, there is also a discretionary right for auditors and independent examiners to report to the regulator any matters that they believe may be relevant to the work of the regulator.

The UK charity regulators have prepared guidance to assist auditors and independent examiners in understanding when they can usefully use their discretion to report relevant matters of interest to the regulators.  OSCR is keen to encourage such reporting because it provides useful information on significant issues facing charity trustees and gives OSCR an opportunity to provide advice and guidance to charity trustees or to make a timely regulatory intervention if this is judged appropriate to the charity’s circumstances.