Are your Annual Report & Accounts missing important information?
In a recent review of accounts submitted by Scottish charities, we found that two pieces of information were often completely or partially missing from the information supplied to us by charities in their Annual Report and Accounts:
- Comparative Year Figures and
- Notes to the Accounts.
It’s important to ensure your accounts are completed fully and accurately. Not only will this ensure you comply with Scottish charity law and your accounting requirements, but it will also help to show the public, donors and funders how your charity is using your funds.
Comparative information
All figures in the accounts must include the corresponding amount for the previous financial year. This is called comparative information.
This allows readers of the accounts to make comparisons between financial years and to better understand how the financial position of a charity has changed.
The inclusion of comparative information also makes it easier to see if there are any arithmetical errors and if balances have been carried forward correctly from one year to the next.
Where there is no figure to be shown in the current year’s accounts but there was a corresponding amount in the previous year, then the previous year’s figure must still be shown.
Don’t forget to include this essential information when you are completing your accounts.
Notes to the accounts
Notes are an important part of the accounts that are often overlooked by charities.
The notes expand on or explain the information contained within the accounts and give further details about the numbers. They help a reader with their understanding of the document.
You may want to include information about the following:
- Funds – the nature and purpose of different funds held by the charity.
- Grants – the number and amount of grants given out by the charity, who they were paid to and what type of activities they supported.
- Trustee remuneration – the amount paid to a charity trustee or someone connected to a charity trustee (if none, this must be stated).
- Trustee expenses – the total amount of expenses paid and the number of charity trustees receiving expense (if none, this must be stated).
- Transactions with trustees and connected persons - the nature of any transactions between the charity and any charity trustee or person connected to a charity trustee. The note must include the nature of the relationship, the nature and amount of the transaction, and any outstanding balances at financial year end.
- Other information – any further information required to help the reader to understand the accounts.
Smaller charities with a gross income of less than £250,000 can use the accounts templates in the Receipts and Payments Accounts Work Pack which include the notes to the accounts.
The statement of accounts for Fully Accrued accounts must include notes to the accounts that explain the accounting policies adopted and explain or expand on the information contained within the main accounting statements. Fully accrued accounts must comply with the Charities SORP (FRS102), where more information can be found about the requirements for notes to the accounts.
More information about how to prepare your annual report and accounts can be found on our website.