• All charities rely on their reputation. Charities have a privileged position including exemption from Corporation Tax. Donors give money to charities on the basis that the funds will be used responsibly and in accordance with the publicly declared charitable purposes.


    It is the responsibility of Trustees of Scottish charities to ensure that accounts are prepared at least annually and filed with the Annual Return to the Office of the Scottish Regulator (OSCR).

  • Scottish charities have 9 months from their financial year end to file an annual return with OSCR. Charities that do not meet this deadline will be considered to be in default of their registration with OSCR and will be placed on the defaulting charities list. Charities failing to submit the required forms within a further 12 months will be considered for removal from the Scottish Charity Register and may lose their charitable status.

    If a charity is placed on the defaulting charities list it damages the reputation of the organisation and puts all future funding at risk. All Trustees are personally responsible for ensuring that their charity’s information on the OSCR website is correct and up to date. If any information is incorrect or your annual return is listed as being overdue, you will need to prepare your annual accounts and complete the annual return as soon as possible.

  • Accounts basis – accruals vs. receipts and payments

    All UK companies registered with Companies House are required to file fully accrued accounts. If your governing document requires accrued accounts or an audit you must produce accounts on this basis. OSCR permits accounts to be prepared on a simpler receipts and payments basis for unincorporated organisations with no other external reporting requirements. It may be beneficial for the charity to consider changing to the receipts and payments method if the accounts have previously been prepared on an accruals basis.

    Accounts prepared under the receipts and payments basis are much easier to compile than fully accrued accounts. The information is more basic, but it is easier for non-financial people to prepare and is therefore a more cost-effective solution for small charities without an accountant on the staff team. Your existing staff or volunteers may be able keep up to date accounts without waiting for your accountant to complete the annual accounts. Receipts and payments accounts are not required to have a full audit. Trustees can choose instead to have an Independent Examination.

    Fully accrued accounts are more complex to compile but give more detailed information. Trustees may be more used to this format and may prefer accrued accounts. For smaller charities and where an audit is not required, accrued accounts can be scrutinised by an Independent Examiner.

  • Audit vs. Independent Examination

    Scottish charitable companies with an income of less than £500,000 and assets of less than £3,260,000 can choose to have an Independent Examination rather than a full audit. Charitable companies and unincorporated organisations must appoint a suitable Independent Examiner to scrutinise the accounts.  For accrued accounts the Independent Examiner must be a member of a professional body, e.g.

    Chartered Institute of Management Accountants (CIMA)

    Institute of Chartered Accountants of Scotland (ICAS)

    Institute of Chartered Accountants in England and Wales (ICEAW)

    Association of Chartered Certified Accountants (ACCA)

    For accounts prepared on the receipts and payments basis with an income of less than £250,000 the qualifications required by an Independent Examiner are less strict; however it remains the responsibility of Trustees to ensure that any auditor or Independent Examiner is suitably qualified and experienced to do the job.

    An Independent Examination is cheaper than an audit, but is less comprehensive. Trustees must ensure that they are making an informed decision if they opt for an Independent Examiner over an auditor for their annual accounts.

    Choosing an independent examiner or accountant

    Charity Trustees are required to act with due care and diligence. This includes ensuring that volunteers and staff are suitably trained and any external consultants are professionally qualified. Trustees are responsible for keeping proper accounting records and to have the financial accounts independently examined or audited annually.