Charities are being urged to get their accounts in order after the Charity Commission published a list of excuses received from charities which failed to file on time.
Excuses ranged from “I don’t have access to the internet,” (sent via email) to “Your website was closed,” and “I already did it…last year”.
The Commission has stated that thousands of charities are currently in default while a recent survey suggested nearly one third of the accounts filed were of ‘unacceptable quality’.
Sue Foster, of UK200Group member Knill James Chartered Accountants, explains: “Some of the excuses published in the Charity Commission report are certainly humorous but there is a serious side to the report because it’s clear that not all charities understand their accounting responsibilities.
“The bottom line is that all charities with income over £25,000 (and Charitable Incorporated Organisations regardless of income) are required to submit accounts. Charities need to start thinking carefully about their accounts – not least because the Charity Commission is now beginning a drive in 2016 to target those who are in default.”
The issue for charities is not only about compliance, however. There are also fears that failure to file reports could lead to loss of reputation and ultimately affect income.
Sue Foster added: “Transparency is increasingly important for charities and their accounts must be made available to the public on request. So failing to report can certainly be damaging.
“Now is a good time for charities to get their house in order. Charities are required to submit their accounts within 10 months of their year-end. For those with year ends of 31 December 2015 and beyond who are required to prepare accounts under the Statement of Recommended Practice (SORP) there are also changes ahead in what they need to file. They will need to decide whether to apply Charities SORP (FRS 102) or Charities SORP (FRSSE). With this in mind they need to be preparing for this change and should be even more vigilant in ensuring accounts are prepared on a timely basis.”
Charities may use the FRSSE if they meet two of the following three criteria: gross income not exceeding £6.5m, total assets not exceeding £3.26m, employing less than 50 staff. FRS 102 may be followed by any charity, but often requires that more information is provided in the notes to the accounts. However, with Charities SORP (FRSSE) due to change soon, the choice is not as straightforward as it looks at first glance. It is worth talking to accountants as soon as possible to be sure of making the right decision.