We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
New ACCA factsheet explains the switch
Charity trustees across the UK and Ireland are responsible for keeping accounting records and preparing the accounts for their charity. Depending on jurisdiction most or all have to file them with the charity regulator too. What the four charity law jurisdictions have in common is that provided the charity is not established as a company then most charities can choose to prepare accounts on a cash basis (also known as receipts and payments accounts) or on accruals basis.
ACCA has produced a factsheet aimed at explaining what the switch to accruals accounting involves to help trustees make the choice.
Trustees and practitioners advising them will find the factsheet helpful in:
- explaining the features of accruals accounting
- explaining the role of the Charities Statement of Recommended Practice (SORP) – the SORP is mandatory for UK charities
- letting the charity trustee finance lead or treasurer know what is involved in preparing accruals accounts whether they are planning to do them or are providing the required information to practitioner who is helping them
- appreciating why accruals accounts are harder to prepare and why a fee (or higher fee) may be required if the trustees retain someone to do it for them
- helping volunteer independent examiners who are not trained accountants or accountants who are unfamiliar with the SORP to understand what charity accruals accounts involve.
The factsheet also sets out the common problems that trustees and practitioners need to consider where charity accounts are prepared on an accruals basis.