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Charity accounts

Requirement of charity to apply SoRP and FRS102

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I have recently taken on the accounting work for a very small charity on a voluntary basis. The charity was set up many years ago with a bequest and now consists of a number of investments in quoted companies. Annual income is in the region of £1,500 and this is used to make grants for educational purposes. No attempt is made to increase the income by asking for public donations for example.

Historically the accounts produced have been a simple I&E account and the balance sheet which is more or less investments at cost, cash at bank on the asset side, representing capital. The charity is beneath the threshold for registration with the Charities Commission (though it does have an HMRC reference) but reading all the guidance it appears that if it is to produce accruals accounts these need to follow the charities SoRP and FRS 102. This will entail a trustees report being prepared and more disclosures in the accounts. Also the investments would need to be held at market value with any movements from one year to the next reflected in the statement of financial affairs. As the only readers of the accounts are the trustees and possibly the educational establishment connected to the grants, this seems way over the top and excessive.

There is an alternative, which is to prepare accounts on a cash basis, which might be the only option even though the trustees understand accruals accounting and ideally would prefer to continue with the existing practice.

Can anyone with experience of charities please confirm my understanding (or let me know of that is incorrect) or identify any way round this.

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By lionofludesch
11th Jan 2020 11:16

So long as the charity isn't a limited company, you can do cash accounting at the income level you mention.

Failing that, it's full FRS102A and SoRP.

On the other hand, you don't have to file accounts so no-one's looking.

Or do both. Receipts and payments in case the CC pulls you. Accounts on whatever basis you like for management purposes.

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By Ian Bee
13th Jan 2020 11:26

Thanks for your reply, and that was the conclusion I had reached too.

Since sending the question I also thought to do as as you suggest, to prepare accruals accounts for the trustees themselves and receipts/payments if anyone else asks (which they are quite likely to just for interest).

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