Charity Receipts and Payment Accounts

The format and requirements for Annual Accounts prepared by registered charities in Scotland are set out in the Charity and Trustees Investment (Scotland) Act regulated by the Office of the Scottish Charity Register (OSCR). All charities are required to have their Annual Accounts externally scrutinized.

Charity Receipts and Payments Accounts are similar to Income and Expenditure accounts in that they show all income received and expenditure paid out during the financial year, along with a Statement of Balances that reconciles the income and expenditure to the opening and closing cash and bank balances.

Which charities should prepare Receipts and Payments Accounts?

First check your constitution. Providing that your constitution does not specify accrued accounts (sometimes worded as ‘true and fair’ accounts), Receipts and Payments Accounts (in the required format) should be prepared (and submitted to OSCR) by:

  • small unincorporated groups who are also registered charities  AND
  • have a gross annual income not exceeding £250,000 

If there is a requirement in your constitution, other legislation or a special declaration by your Charity Trustees, to prepare fully accrued accounts, then your group must do so (irrespective of your income threshold).

What to include in your charity’s Receipts and Payments Accounts

Charity Receipts and Payments must include:- 

  • a Charity Trustees' Annual Report (TAR)
  • A Statement of the Receipts and Payments
  • A Statement of Balance(s) as at the last day of the financial year
  • Notes to the accounts
  • An appropriate external scrutiny report

You are advised to follow the guidelines and template for Charity Receipts and Payments Accounts prepared by OSCR and available on their website.

Once your Annual Accounts are prepared, and have been approved by your charity Trustees, one of the charity Trustees (on behalf of all the charity trustees) should sign both the Statement of Balance(s) and the Trustees' Annual Report (TAR) before submitting the accounts for external scrutiny.

Once the Annual Accounts have been independently examined or audited, they should be sent to OSCR (along with your charity’s Annual Return).

 

Charity Trustees' Annual Report (TAR)

The Charity Trustees' Annual Report (TAR) is a crucial component of the charity's Receipts and Payments Accounts. It provides information regarding the structure, governance and management of the charity.  It should also explain the areas not covered by the financial statements, explaining what the charity has done (outputs), what the charity has achieved (outcomes) and what difference the charity has made (impact). The TAR should include:- 

  • The name of the charity as it appears on the Scottish Charity register
  • The charity's Scottish Charity number
  • The address of the principal office, or the name and address of one of the trustees
  • The names of all the trustees on the date the annual report was provided
  • The name of anyone who has been a charity trustee during the charity's financial year
  • how the charity is constituted, its organisational structure, and its affiliation to any other body
  • The purposes of the charity as set out in the governing document or constitution
  • A description of how the charity's trustees are appointed
  • A summary of the main activities and achievements during the financial year
  • A description of the policy the trustees have adopted to determine the level of reserves to be held by the charity
  • If the charity has a deficit, an explanation of how it came about and what steps are being taken to rectify it;
  • An analysis of donated facilities and services, if any, that the charity received during the financial year.

Statement of Receipts and Payments

This part of the Annual Accounts should include :

  • a record of all cash movements in and out – summarized by the nature or activity
  • the end result – surplus or deficit
  • a breakdown of restricted and unrestricted (and, if held, endowment) funds
  • comparison figures for the preceding year

Receipts will be all the income your group has received over the year.  If your group’s income has included any of the following these should be shown separately:-

  • Donations
  • Legacies
  • Grants
  • Fundraising income
  • Trading receipts
  • Investment income
  • Rent
  • Receipts from any other charitable activities
  • Proceeds from sale of investments or fixed assets

Expenditure should record everything that your group has paid out over the year. If your group’s expenditure has included any of the following, these should be shown separately:-

  • costs associated with fundraising activities
  • gross trading payments
  • investment management costs
  • payments directly relating to charitable activities
  • governance costs
  • purchase of any investments or fixed assets

The Statement of Balances 

Your Receipts and Payments Accounts will need to include a Statement of Balances which sets out :

  • the reconciliation of cash and bank balances at the start of the financial year to the cash and bank balances at the end of the financial year, with the surplus or deficit at the end of your Statement of Receipts and Payments.
  • distinction between restricted and unrestricted funds, as well as any expendable and permanent endowment funds held by the charity.
  • nature and value of any investments or other assets
  • estimates of current and contingent liabilities
  • comparative totals from the previous year

Before submission to OSCR, both the Statement of Balance and the TAR will need to be formally approved by the charity trustees and signed and dated by one of them.

Notes to the Accounts

Use this part of the Annual Accounts to explain anything that is not immediately apparent from the figures. Additionally, you are required to include details of :

  • the nature and purpose of the different funds held by the charity
  • any remuneration paid to a trustee or person connected with a trustee (if none then state that none were paid)
  • the total expenses paid to trustees, and the number receiving expenses (if no expenses have been paid - state so). 
  • any other transactions with trustees or persons connected with a trustee(s)
  • any grants paid out by the charity including number and amount of grants paid and whether or not they were made to an individual or institution. 

 

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Last Updated 19/04/2013 16:44