Scottish Charity Accounting

Accounting regulations

The Scottish Parliament has approved new Accounting Regulations and the Charities Accounts (Scotland) Regulations 2006 apply to financial years starting on or after 1st April 2006.

A copy of OSCR’s guidance Scottish Charity Accounts – A guide to the 2006 Regulations was posted to all active charities in Scotland in mid February 2007. Copies were also sent to local Councils for Voluntary Service, umbrella bodies and libraries. The guidance was designed to allow for easy photocopying by charities.

In addition to the guidance, two further example receipts and payments accounts and a workpack to help charities prepare receipts and payments accounts will be published by OSCR in January 2008.

The guidance to the 2006 Charities Accounts Regulations is divided into three parts. Part 1: The Overview should be read in conjunction with either Part 2: Receipts and Payments accounts, or Part 3: Fully Accrued Accounts, depending on the type of accounts a charity prepares. Part 1: The Overview contains three flow charts to help charities determine the type of accounts they should prepare and the type of external scrutiny to which they should be subject.

Download the guidance

Part 1: The Overview

Part 2: Receipts and Payments accounts

Part 3: Fully Accrued Accounts

For charities required to prepare fully accrued SORP compliant accounts, the second edition of the Charities SORP 2005 is available to download.

Companies Act 2006 - changes to external scrutiny requirements for Scottish Charitable Companies

In accordance with the Companies Act 2006 (Commencement No. 6, Saving and Commencement Nos.3 and 5 (Amendment)) Order 2008, section 1175 and Part 1 of Schedule 9 of the Companies Act 2006 comes into force on 1 April 2008.

Per the Explanatory Memorandum to this Order, "this has the effect of removing from the Companies Act 1985 the special rules on the audit of small charities with effect from 1 April 2008. For financial years beginning on or after that date, small charitable companies will be subject to the financial scrutiny requirements in...the Charities Accounts (Scotland) Regulations 2006 in Scotland".

The practical effect of this is that small charitable companies will be subject to the independent examination/audit thresholds as set out in the 2006 Accounts Regulations. Only where a charitable company is a large company and over the audit threshold set out in the Companies Act 2006 would they be required to have an audit under that legislation as well as the 2006 Accounts Regulations.

This change is effective for accounting periods starting on or after 1 April 2008.

The table below shows the external scrutiny requirements for Scottish charitable companies under this new regime:

Criteria (see also note below)

External scrutiny	Companies Act 1985	Companies Act 2006
Independent examination by a qualified person	Gross income £90,000 or less and gross assets of not more than £2.8m	Gross income less than £500,000 and gross assets not ore than £2.8m
Accountant's report in accordance with the Companies Act 1985	Gross income more than £90,000 but not more than £250,000 and gross assets not more than £1.4m	Not applicable
Audit	Gross income £90,000 or less and gross assets over £2.8m or Gross income more than £90,000 but not more than £250,000 and gross assets more than £1.4m or Gross income more than £250,000	Gross income of £500,000 or more or Gross assets more than £2.8m

Note: where the charity has an existing constitutional requirement to have the accounts audited or where the charity trustees decide to do so, the thresholds noted here will not be relevant.

Links to the legislation

The Charities Accounts (Scotland) Regulations 2006
SSI 2006/218 - Web version (HTML)
SSI 2006/218 - Print version (PDF - 68 KB)
SSI 2006/218 - Executive Note (PDF - 80 KB)

SORP 2005

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