Charities with incoming resources over £25,000 are required to file their accounts within ten months of their financial year end. We display accounts for a charity for 5 accounting periods. So we keep our accounting and annual return guidance on the web for a period of six years - this means it is available to clarify the regulations under which the accounts we are displaying were prepared and scrutinised. The guidance in this section of the website relates to accounting periods ending before 1 April 2009 and to avoid confusion has been separated from current accounting guidance applicable for accounting periods ending on or after 1 April 2009.
Accounts preparation: the framework
For guidance for financial years ending before 1 April 2009 on when you must prepare an annual report and accounts, or the financial thresholds for having the accounts externally audited or examined, or the filing of your report and accounts with us, see:
Example Accounts predating the public benefit reporting requirement
The examples below are applicable for financial years ending before 1 April 2008. They should not be used by charities that are preparing an Annual Report for a financial year starting on or after 1 April 2008 as charities are now required by law to meet public benefit reporting requirements.
Non-company charities (subject to audit)
Non-company charity (independently examined)
- B E Factor (53kb)
A small grant making trust also undertaking programme related investment
Scrutiny
The thresholds for requiring any scrutiny and the types of scrutiny required for any given size of charity have changed considerably in the period from 1996 to 2009. If you want to see what the thresholds for scrutiny were in any particular financial year from 1996 to date see The Reporting and Accounting Framework for Charities.
Reporting Accountant
For financial years beginning before 1 April 2008, small charitable companies below the audit threshold could opt for an audit exemption report by a Reporting Accountant instead of an audit. The standards for such work were published by the Auditing Practices Board.
For financial years starting on or after 1 April 2008, company charities which are not required to be audited under Companies Act provisions fall within the audit and independent examination regime of the Charities Act 1993.
Independent Examination
Prior to financial years beginning 1 April 2008 only non company charities below the audit threshold could have their accounts examined by an independent examiner rather than an auditor. We produced guidance for independent examiners and pro forma independent examiners reports:
Archived Questions and Answers on the audit of company charities.
1. Which companies may claim exemption from audit under the Companies Act 1985?
For financial years beginning before 6 April 2008 company audit thresholds are set under the Companies Act 1985. A small company that does not exceed the audit threshold may elect for exemption from audit under company law. For financial years beginning before 6 April 2008 a small company is one that meets two of the following 3 criteria:
- income not more than £5.6m
- gross assets not more than £2.8m
- average number of employees for the year not more than 50
2. What statement must be made in accounts if audit exemption is to be taken?
To take advantage of the audit exemption conferred by section 249A of the Companies Act 1985 a statement must be provided on the company balance sheet by its directors concerning certain matters. A company is not entitled to audit exemption under the Companies Act in the absence of this required statement.
3. What must a Companies Act audit exemption statement say if accounts prepared under Companies Act 1985?
If the accounts prepared under the Companies Act 1985 are to be exempt from audit then a statement by the directors (required by section 249B (4) of the Companies Act 1985) must appear on the balance sheet to the effect that:
- for the year in question the company was entitled to exemption under subsection (1) of section 249A of the Companies Act 1985,
- members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 249B(2) of the Companies Act 1985,
- the directors acknowledge their responsibilities for:
- ensuring that the company keeps accounting records which comply with section 221 of the Companies Act 1985, and
- preparing accounts which give a true and fair view of the state of affairs of the company as at the end of the financial year and of it income and expenditure for the financial year in accordance with the requirements of section 226 of the Companies Act 1985, and which otherwise comply with the requirements of this Act relating to accounts, so far as applicable to the company.
The required statement must appear in the balance sheet above the signature approving the accounts.
4. When must a parent company prepare group accounts under the Companies Act 1985?
A parent company must prepare group accounts for a financial year unless its group qualifies as a small or medium-sized group (see section 248 of the Act).
Generally, a company qualifies as 'small' or 'medium-sized' in its first financial year, or in any subsequent financial year if it fulfils the conditions in that year and the year before. If the company ceases to be small or medium-sized, the exemption continues for the first year that the company does not fulfill the conditions.
The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements -
| Small group |
| 1 |
Aggregate turnover |
Not more than £5.6 million net (or 6.72 million gross) |
| 2 |
Aggregate balance sheet |
Not more than £2.8 million net total (or 3.36 million gross) |
| 3 |
Aggregate number of employees |
Not more than 50 |
| Medium-sized group |
| 1 |
Aggregate turnover |
Not more than £22.8 million net (or 27.36 million gross) |
| 2 |
Aggregate balance sheet total |
Not more than £11.4 million net (or 13.68 million gross) |
| 3 |
Aggregate number of employees |
Not more than 250. |
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