Frequently Asked Questions

Accounts & Reporting

SORP 2015 guide 1 Which one do we choose? **NEW**

Following the introduction of two new SORPs covering accounting periods commencing on or after 1 January 2015, we have produced a brief guide explaining why there are two SORPs, the main differences between them and guidance on making a decision about which one to choose.

SORP 2015 guide 2 What’s new about the SORPs? **NEW**

Following the introduction of two new SORPs covering accounting periods commencing on or after 1 January 2015, we have produced a brief guide covering with the major differences between the existing SORP and the new ones.

How does the increase in the Charities audit threshold affect me?

From March 2015 the Government announced an increase in the audit threshold for charities in England and Wales. We have produced a short paper summarising the changes and associated implications.

What is the process for getting my accounts done?

We have produced a short guide which explains what is involved when we prepare and/or examine your accounts. This covers practical information and tips to help make the process as quick, easy and efficient as possible for you. Please use the guide and help us to help you.

How quickly can you prepare our accounts?

This will depend on the jobs we currently have on.  If you have a deadline we will do our best to meet it.  The best thing to do is to talk to us as early as possible and before you fix the date of your AGM.

How much will it cost?

This depends on the turnover, the complexity, the volume of transactions and the quality of your records.  Our minimum fee is £100.  VAT will be added to this charge.  For an estimate call WYCAS on 0113 2706291 or email Simon Bostrom.

How do I book in my accounts?

When you have reached the point when you have a reasonable idea of when you require your accounts, allowing for factors such as the date of your AGM and when you expect to have all your financial records available, it is then that you should call to discuss the job with the Community Accountant.

Please see our comprehensive guide on booking in your accounts for full details.  There is also a handy flow chart to help you through the accounts process as a whole.

What are restricted funds?

Funds which have been given to your organisation for a specific purpose, and can only be used for that purpose.

What are accruals accounts?

The financial reports reflect the total resources in and out in the financial period, not just the cash and bank movements. For example, if goods have been received but not yet paid for an adjustment will be made to include the cost of these goods in expenditure.  Similarly, if payments have been made in advance for the next financial period an adjustment will be made.  Where large, expensive assets are bought that will be used for several years, the cost of these is spread over several years (rather than leaving the total expense in the year of purchase).  This is known as capitalising and depreciating the assets.

What is the difference between income & expenditure accounts and receipts & payments accounts?

Income & expenditure accounts are on an accruals basis, whereas receipts & payments accounts show only the cash and bank transactions in that accounting period.

What is the difference between audit and independent examination?

An audit is a rigorous check of the accounts to give an affirmation that the accounts give a “True and Fair” view.  An independent examination is for charities, and is the minimum legal external scrutiny required if there is a turnover of £25,000 – £500,000.  It is not as rigorous (or expensive) as an audit and results in a statement that there is no reason to believe the accounts are not accurate.

What’s the difference between management accounts and annual accounts?

Management accounts are produced throughout the year to give information about the financial position and assurance as to the balances held.  The format can be varied, to be most useful to the managers of the organisation.  (They often include a comparison between the budget and the actual figures to date.) Annual accounts formally state the activity in the year and the position at the year end.  The constitution and any regulators will require that annual accounts are prepared.


What accounting software package do you recommend?

We often recommend QuickBooks Pro as it is user friendly and allows records to be kept for different funding pots (classes).  For example, if recorded correctly you could track the income and expenditure of any grant.  The Simple Start version does not have this facility.  There are 3 WYCAS Good Practice Guides available on QuickBooks and training courses are run regularly.

When should we move from manual cashbooks to excel spreadsheets or accounting software?

When it becomes difficult to keep track!  As a guide, if you have over 10 income or expenditure transactions per month it may be time to move to an electronic record (such as a spreadsheet).  If you are accounting for several different funding pots QuickBooks may be most helpful.

My QB bank reconciliation doesn’t work, what can I do?

Check that the opening balance on the reconciliation screen matches the closing balance on your previous statement.  If it does not, run the ‘Locate Discrepancies’ report which will tell you what has changed since the last reconciliation.  If you can’t figure it out, call the WYCAS advice line on 0113 2706269.

Planning & Budgets

What is a budget?

A budget is a financial plan.  It could be for a whole organisation, a project or a funding application.

What is the difference between a budget and a cashflow forecast?

A budget is normally shown for a full year (or specified period) and shows all the relevant income and expenditure for the period; it does not show the bank or cash movement separately.  However, a cashflow forecast does show the anticipated cash in and out (or receipts and payments) and is usually splits the transactions into monthly columns.  A budget is used to plan ahead for the organisation or a project, whereas the cashflow forecast is used to manage cash tightly eg. to ensure the bank account is not overdrawn.

What is full cost recovery?

Ensuring that all costs are included when you are calculating the price you will charge for a service.  For example, the overhead costs of running a central office are not a direct cost of the project, but are something which the project income should contribute towards.  There is a WYCAS Good Practice Guide on this subject; please click here to request a free copy.

If we increase our earned income, what do we need to consider?


  • What are the increased costs incurred by earning more income (eg. More staff time or more materials)?
  • Remember if you make sales exceeding £70,000 in a 12 month rolling period (2010-11 threshold), then you must register for VAT.
  • Think about whether you need to pay Corporation Tax on your profits:
    – if your profits are applied to charitable objects, you may be eligible for corporation tax relief.
    – if your profit-generating activities are not the primary purpose of your charity, there are limits on how much you can generate, tax free.  See HMRC charities website or call their advice line for more information (0845 6032691).
  • Consider the costs of marketing yourselves.


Do we need to have a petty cash tin and what should we use it for?

Use petty cash for items only of low value eg. below £20.  All other expenditure should be reimbursed through the full authorisation process (eg. Completing a claim form then paid by a dual signatory authorisation process).  This is because petty cash is at high risk of being misused.    If you don’t need petty cash, don’t use it.  It is more administration and more risk.  However it may not be acceptable to expect volunteers or workers to ‘loan’ the organisation money, pending reimbursement.

Should we insure our petty cash?

It may be a good idea, although the terms of the insurance will stipulate that conditions are met in how cash is kept and the maximum amount held.  A failure to meet these conditions will invalidate the insurance.

What is a bank reconciliation and how often should you do one?

A bank reconciliation is a process of matching the transactions recorded in the cashbook (whether it be manual or electronic) to the items listed on the bank statement.  It ensures that no transaction is omitted from the cashbook record and that correct amounts have been entered.

Do the reconciliation each time you receive a statement.

The Money Management for Community Groups booklet, which is available free of charge from WYCAS covers how to do a bank reconciliation.

Regulation: Charities, Companies, HMRC etc

What must an employer do about paying pensions? **NEW**

The 2008 Pensions Act made it compulsory for every UK employer to take action before April 2017 – and that includes small charities.  To help employers fulfil their responsibilities WYCAS have prepared a briefing note –  which helps you to identify what needs to be done, to calculate the financial impact and signpost you to further guidance.

Should we register as a charity?

If your organisation has wholly charitable objects, is for public benefit and has income of over £5,000 (and it is not a CIC) it must register as a charity with the Charity Commission.  Please see page 2 on our Spring 11 Newsletter for further information.

When do we need to be VAT registered?

You need to register if you make taxable sales of over £81,000  in a 12 month rolling period. (This is the 2014-2015 threshold.)  You may chose to register voluntarily (for possible advantages of doing this see HMRC’s VAT website.

We are a company, what accounts do we need to keep?

The Companies Act 2006 requires you to keep records.  Your accounts will need to be prepared on an accruals basis and you need to file your accounts (submit them to Companies House) on time or a fine will be applied.

What are the advantages of being a charity?

  • You are eligible for some reliefs on taxation.
  • You gain some kudos by being registered; this may make some grant funds more accessible.
  • Some charitable trusts will only give funding to registered charities.
  • You can reclaim Gift Aid on donations accompanied by a signed declaration.
  • You are eligible for some VAT relief on certain purchases (whether you are VAT registered or not).  For more information, please request a WYCAS Good Practice Guide on this subject.

What are the disadvantages of being a charity?

  • You will be regulated by the Charity Commission.
  • You cannot pay any of the management committee for their role (unless this is approved by the Charity Commission).

What is our ARD?

Accounting Reference Date.  This is given when you first register as a company and states the last day of your accounting period.  You can find this if you look up your company through the Companies House website.  The ARD can easily be changed but there are time limits on when you can apply to Companies House to change the company’s ARD.

We are a social enterprise; what accounts do we need to keep?

A social enterprise is a business operating for the good of the community.  It is not a legal status; you may be a social enterprise and a (charitable or not) company / a social enterprise and a (charitable or not) unincorporated association.

We are a social enterprise; do we need to pay tax?

You will need to pay tax if you have generated a profit and are not eligible for the charitable exemptions.

How long should I retain my documents for? **NEW**

WYCAS are often asked, “How long should we keep our documents for?”

The table below provides some brief guidance:

Document type Period Reason
Purchase invoices, supplier documentation, record of cheque payments, payments cash book 6 years Companies Act / Charities Act
Capital purchase invoices 10 years Companies Act / Charities Act
Petty cash records 7 years Companies Act / VAT / Charities Act
Bank statements 6 years Statute of Limitations
Receipts cash book, paying in counterfoils, remittance advices 10 years Companies Act / Charities Act
Sales ledger 10 years Statute of Limitations
Bank reconciliation 6 years Statute of Limitations

Procedures & Controls

What are the most important financial controls?

Probably the controls around authorising a payment / purchase.

Why should we have agreed financial procedures?

If there are agreed procedures then all those involved in the organisation have a source of reference on who should do what and when in the financial administration of the organisation.  It is evidence that financial management is taken seriously; often funders will ask for a copy of the financial procedures.

We find it easier to pay with a card, not a cheque. Is that ok?

Be aware that expenditure can be incurred by one person alone with a card, whereas 2 signatures are usually needed on a cheque.  This increases the risk of misuse of funds.

How can we minimise the risks on bank payments?

Set a limit (or threshold) on the amount of a purchase, above which it must have an approval before expenditure is incurred.  For electronic transactions, get a dual electronic signatory (Unity Bank do these).  Have debit cards only on an account which holds a specified maximum amount and make these debit cards so they can only spend up to the balance held on that account

Staff and Volunteers’ payments. What are the added responsibilities if you employ staff?

As an employer you must follow the law and:

  •     Administer the payroll (or ensure a bureau does it for you) to ensure tax and NICs are paid.
  •     Have employer’s liability insurance.
  •     Ensure health and safety regulations are maintained.
  •     Provide sick pay and holidays.
  •     Adhere to minimum wage legislation.
  •     From 2012 make pension contributions.

Contact the Pay and Employment Rights Service (PERS) in West Yorkshire for more advice. Tel: 01924 428030.

Our workers say they are self employed, is that enough?

No; the law does not see it that way and will penalise you heavily if you have failed to pay the correct taxes on the employment.  Use the HMRC’s Employment Status Indicator to find out if they are really self employed.

Can we pay our volunteers?

It is good practice only to reimburse their out of pocket expenses, and buy them lunch etc if their volunteering hours necessitate this.  Extensive guidance can be found on the Volunteering England website.

It is important to obtain receipts for all expenditure which they have incurred (except car / van mileage, which can be reimbursed at 45p per mile for the first 10,000 miles.  See the HMRC guidance on this).

The risk is that you may be perceived as paying the individual and this may be a tax or benefit issue.

It is a good idea for the organisation to have a policy on payment of volunteers’ expenses.  WYCAS have a Good Practice Guide on this subject.

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Stringer House, 34 Lupton Street, Hunslet, Leeds, LS10 2QW | Charity Number 1076962 | Company number 3721361