Annual Reporting Requirements for Small Charitable Trusts

June 21, 2016

Under the Charities (Accounts and Reports) Regulations (Northern Ireland) 2015, it is now a legal requirement for all registered charities to report annually to the Charity Commission for Northern Ireland (CCNI). Through the annual reporting programme registered charities will be required to:

  1. Complete and submit an online annual monitoring return form; and
  2. Submit their accounts and reports.

Copies of accounts and reports received from charities will be made publicly available on each charity’s register entry.

N.B. These reporting requirements apply only to charities which are registered with CCNI, not those on the deemed list.

Reporting and Accounting Requirements – Interim Reporting Arrangements

Although the full accounting and reporting requirements will apply to financial years beginning on or after 1 January 2016, a registered charity may choose to apply the interim reporting arrangements where it is reporting on a year that commenced before 1 January 2016.

Under the interim reporting arrangements, charities must:

  1. Complete and submit an annual monitoring return; and
  2. Produce and submit accounts and reports in their current format.

Prior to 1 January 2016, all charities in Northern Ireland were obliged under the Charities Act (Northern Ireland) 1964 to keep accounting records for a minimum of 7 years and prepare consecutive statements of accounts. This is therefore what should be provided to CCNI under the interim reporting arrangements. If a charity is required to have its accounts reviewed or audited (for example, as a condition of funding), this report must be submitted. Equally, if a trustees’ annual report is prepared alongside the accounts, this report must also be submitted.

These provisions will apply to a limited number of charities and for a transitional time only. For all subsequent financial years beginning on or after 1 January 2016, accounts and reports must be prepared in accordance with the new regulations.

Reporting and Accounting Requirements – financial years commencing on or after 1 January 2016

When reporting on a full financial year that begins on or after 1 January 2016, the full accounting and reporting regulations apply.

In respect of unincorporated charities with a gross annual income of less than £250,000, the regulations require the following;

1. Accounts must be produced and submitted 

Unless accruals accounts are required by their governing document, a decision of the trustees or other legislation, small unincorporated charities may choose to prepare their accounts on a receipts and payments basis rather than on an accruals basis. This type of accounts requires two separate documents – a receipts and payments account (providing an analysis of the incoming and outgoing cash for the year) and a statement of assets and liabilities (outlining the charity’s main assets and liabilities at the end of the year, including the cash balances).

 

2. An external scrutiny report must be provided 

The accounts must be independently examined and a report provided, although the charity can choose who undertakes the examination, the only criteria being that the examiner is independent to the trustees. An independent examination is a simpler form of scrutiny than an audit.

3. A trustees’ annual report must be prepared and submitted

The main purpose of this is to report on how the charity has continued to meet the public benefit requirement during the year. The level of detail required depends on the size of the charity therefore smaller charities that prepare receipts and payments accounts can prepare a simplified report. This must include at a minimum:-

  • The charity’s name, NIC number, address and the names of the trustees;
  • The charity’s structure and details of how it is managed;
  • A summary of the charity’s purposes;
  • A summary of the charity’s activities and objectives in the year and achievements and performance (including reporting on its public benefit);
  • A statement as to whether the trustees have complied with the duty to have regard to CCNI’s ‘Public Benefit Requirement’ statutory requirement;
  • A financial review; and
  • Identification of any fund materially in deficit at the end of the year and steps taken by the trustees to eliminate the deficit.
  • The report must then be signed and dated by one or more of the trustees.

4. An annual monitoring return must be completed

This must be filed using an online process accessed through CCNI’s website. All charities must complete Part A, which includes for example details of the charity’s income and expenditure, its activities and whether it works outside the UK and Ireland. All charities with a gross annual income of over £10,000 must complete Part B, which includes for example details of the independent examination of the charity’s accounts, its staff and volunteers and its fundraising. However, smaller charities do not have to complete Part C, which requires more in depth financial information to be provided

Where a charity’s gross annual income is more than £250,000 but less than £500,000, the requirements are as follows:

  1. Accruals accounts must be prepared and submitted;
  2. The accounts must be independently examined by a member of the bodies listed in section 65(4) of the Charities Act (NI) 2008 e.g. the Institute of Chartered Accountants in Ireland;
  3. A trustees’ annual report must be prepared and submitted. A more detailed report is required for charities with this level of income in accordance with the requirements of the Charities Statement of Recommended Practice; and
  4. Parts A, B and C of the annual monitoring return must be completed.

Where a charity’s gross annual income exceeds £500,000, the requirements are as follows:

  1. Accruals accounts must be prepared and submitted;
  2. The accounts must be audited by a registered auditor. This must be in compliance with Section 65(2) of the Charities Act (NI) 2008;
  3. A trustees’ annual report must be prepared and submitted in accordance with the requirements of the Charities Statement of Recommended Practice; and
  4. Parts A, B and C of the annual monitoring return must be completed.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Charities & Social Enterprises Team at Cleaver Fulton Rankin for further advice or information.