Information - Organisational

Accounts & Finance

It is very important to ensure that your organisation obtains the correct type of accounts and external scrutiny as required by relevant regulations, for example, if it has charitable status or is a company limited by guarantee.

If your organisation is a small voluntary association (that is, not a company, or other regulated structure, for example, a credit union) with small amounts of income/expenditure and assets, which does not have charitable status, the instructions about your accounts and any examination required should be laid out in your constitution and these should be followed carefully.

It is possible that, even if you are not subject to any regulation as to your accounts, you may find that your funder(s) have specific requirements in addition to those in your constitution.

 

"Audits" and "Auditors"

MVA are aware that a number of organisations, particularly older established ones, have constitutions that refer to an "audit" or the "auditor" when they mean any independent scrutiny of accounts. OSCR advise that "under the Regulations if the term "audit" is used in a charity's constitution or governing document the charity must have its accounts audited by a registered auditor or by the Auditor General for Scotland (responsible principally for public bodies)." They advise that charity trustees of such charities may wish to review their constitutions and amend the constitution. Any change to the constitution must be carried out in accordance with the terms of the constitution . Notification of the change to the constitution must also be sent to OSCR within 3 months of the change being made - (note, permission from OSCR is required for some other changes to the constitution - see OSCR website).

Non-charitable groups whose governing documents state "audit" or "auditor" may also wish to change their constitutions, particularly small groups with a low income - however, organisations with larger incomes may decide that it would be beneficial to retain these terms, for example for a particular funder.

Charity Accounts

Charities are required by Charity Law to produce particular types of accounts and to have their accounts externally looked at.

The Office of the Scottish Charity Regulator (OSCR) produce extensive guidance on the type of accounts required - http://www.oscr.org.uk/meeting-our-requirements/charity-accounting - including downloadable guidance "Scottish Charity Accounts - A Guide to the 2006 Regulations". Please note that the Guide was published in 2007 and there have been regulation changes since then which are given on the following web pages http://www.oscr.org.uk/meeting-our-requirements/charity-accounting and http://www.oscr.org.uk/meeting-our-requirements/charity-accounting/external-scrutiny/.

Please note that OSCR are no longer accepting accounts that do not fit their requirements, for example, even the smallest charities now have to produce their accounts in the accepted formats (for example, Receipts and Payments). You may therefore find that the format you have used for many years is not acceptable. Please note, that if you do not submit the correct type of accounts to OSCR you are risking being removed from the Charity Register.

Some charities may take the decision to get permission from OSCR to remove themselves from the Charity Register so as not to have to meet the requirements if they are finding this difficult. However, they should bear in mind that:

  1. they will be subject to continued regulation by OSCR, even if they are no longer on the Register, until such time as the funds they had at removal from the Register no longer exist - guidance "Monitoring of charitable assets following removal from the Scottish Charity Register– a guide to OSCR Monitoring under Section 19" is available from the OSCR website - www.oscr.org.uk

  2. if they are looking for funding, some funders will only fund charities;

  3. members of the public may prefer to donate to a registered charity.

Guidance on what types of accounts and external scrutiny that charities require, including templates and examples, is available on the OSCR website - http://www.oscr.org.uk/meeting-our-requirements/charity-accounting/.

Charities are also required to produce a "Trustees' Annual Report" to accompany the accounts. This can be short and straightforward depending on the type and size of the charity - guidance is available on the OSCR website (in the Accounting Guidance). The OSCR website includes a sample and a template.

If you are thinking of producing a more comprehensive Annual Report that might be of use for other purposes, e.g. marketing, some additional guidance is available from the following MVA report:

Writing an Annual Report (and Accounts) - Guide (June 2010)

A request to write an Annual Report (and accounts) can cause panic - this Guide has been produced by MVA to help you.

If you want to receive an copy, please contact the MVA Information Officer, or tel: 0131 663 9471.

Company Accounts

Companies are regulated by Companies House and are bound by Company Law. Guidance on accounts and external scrutiny required by charities that are companies is included in the OSCR Guidance - www.oscr.org.uk. Further information on Annual Returns and other requirements is available from the Companies House website - http://www.companieshouse.gov.uk/.

Sources of Further Information

  1. MVA Community Toolkit - lots of useful information and model documents - http://www.mvacvs.org.uk/mva/toolkit.html
  2. Scottish Council for Voluntary Organisations (SCVO) has a useful section on their website about Money - see SCVO Money website.
  3. The Office of the Scottish Charity Regulator (OSCR) www.oscr.org.uk has published Accounting Guidance for charities on their website http://www.oscr.org.uk/ScottishCharityAccounting.stm. The Guidance includes easy to follow charts to help you decide what type of accounts and external scrutiny* you require if you have charitable status (including charitable companies). *e.g. independent examination by a qualified person; accountant's report in accordance with the Companies Act 1985; Audit (see OSCR's page on Scottish Charity Accounting). Note, it is also important to check what your governing document (for example, constitution) says (see OSCR Guidance for further information).
  4. Independent examination - if you are looking for a qualified independent examiner, the website of the Association of Charity Independent Examiners (ACIE) http://www.acie.org.uk/ includes a Directory of members.
  5. Taxes - tax guidance for Charities and Community Amateur Sports Clubs can be found on the HM Revenue and Customs (HMRC) website - http://www.hmrc.gov.uk/charities/
  6. VAT guidance for charities and not-for-profit organisations - information on VAT can be found on the HM Revenue and Customs website - http://www.hmrc.gov.uk/charities/vat/index.htm.

MVA holds some publications on accounts and finance in our Resource Room which can be viewed by arrangement, tel: 0131 663 9471.

MVA also run regular training events to help you run your organisation.  Information on MVA training, and other events can be found in the Calendar section.

If your organisation or group is working or based in Midlothian (or intends to do so), please contact the staff at Midlothian Voluntary Action if you require further information - see Contact MVA.

 

Note:  all the information on this website applies to organisations based in and/or operating in Scotland.

 

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If you experience problems downloading any documents, or are unable to find the information you are looking for, or if you would like some help, please contact MVA’s Information Officer.