Finance

An organisation’s finances are its income and expenditure, in other words, cash and grants that come in and bills that have to be paid out. Managing a group’s finances is an important part of its effective running and development.

Committee members or trustees have a joint responsibility in ensuring proper financial records are kept and that the organisation complies with legal requirements relating to finance. Having someone on the board with experience in finance or accounting is helpful but ultimately, every charity trustee should be aware of their financial responsibilities and duties. They are required to manage the group’s bank account(s), set budgets, report on income and expenditure and prepare annual accounts.

Charities must prepare annual accounts in one of two ways: receipts and payments or accrued accounts. Normally, a charity’s gross income will determine the type of accounts to be prepared.

Receipts and payment accounts summarise all monies received and paid by the charity during its financial year, together with a statement of balances.

Accrued accounts include income which a charity is due to receive and expenses which are due to be met.

Charity accounts must be scrutinised by someone who is independent of the charity. They will review the accounts and produce a report. This will be sent along with the annual accounts to the charity regulator, OSCR.