The Charity Commission has urged charities to ensure they are aware of new accounting requirements.

The regulator is calling on charities to familiarise themselves with its updated financial reporting guidance that takes into account changes to the Charities’ Statement of Recommended Practice: Accounting and Reporting by Charities, known as the SORP, which applies to financial years starting on or after 1 January.

This requires charities to report on certain types of income and lease arrangements as well as new expectations of increased transparency from large charities.

Also, the income thresholds for charities to have their accounts examined or audited has also changed. This includes a doubling the threshold for preparing accruals accounts from £250,000 to £500,000.

While previously the threshold for having account checked by an independent examiner was £25,000 it has been increased to £40,000.

Also, an obligatory audit is now required for charities with either a gross income above £1.5m or gross income above £500,000 and gross assets over £5m. Previously the threshold was £1m.

“You may need to prepare your accounts differently this year as there are some changes to the accounting requirements for charities in England and Wales,” advises the regulator’s senior trustee guidance manager Sue Smith.

“Our refreshed guidance sets out clearly what to do, step by step. We’ve also listened to feedback and made our guidance easier for trustees – and their professional advisers – to use and find the relevant information for their charity.”

Amie Woods, the regulator’s assistant director of accountancy, added: “Charity trustees have stewardship of around £100 billion of charitable money and people want to see how those funds are being spent to do good.

“Accounts and annual returns provide that essential information and by far the majority of charities submit these to the Commission on time. This builds public trust and confidence in charity.

“Our guidance should help charities continue to get it right under the current system. However, the rules for compiling accounts are complex so in the longer-term we want to explore if there are other ways to make it more straightforward for charities.

“It’s not just about cutting red tape, it’s about getting the right balance between reducing the burden on charities whilst maintaining accountability and protecting public trust.”

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