Accrued Accounts give a ‘true and fair’ record of not just the amounts actually received by your group, but also those owed at the end of the financial year. Similarly with expenditure, they record not just the amounts actually paid out, but also the transactions not yet cleared from your bank. They will take into account bills received in the next financial year relating to the year under review (for example, electricity or phone bills) and grants that may span between financial years. As such, Accrued Accounts give a more accurate measure of the organisation’s net worth.
The difference between the amounts recorded under income and the amounts recorded as expenditure (taking into consideration things like outstanding debts and credits, grants which may have been received in advance for the next financial year etc ) will be your group’s surplus or deficit.
An accumulation of surplus funds from one year to the next will give your group ‘reserves’. These reserve funds will represent what your group is worth at any given time.
Which groups should prepare Accrued Accounts?
The preparation and filing of Accrued Accounts is a legal requirement for:
any group which is incorporated (such as Company Ltd By Guarantee or Community Interest Company)
registered charities in Scotland with gross income of £250,000 or more
any community group or organisation with a constitutional requirement to prepare accrued accounts or ‘true and fair’ accounts
registered charities in Scotland where the trustees have decided that they want to prepare accrued or ‘true and fair’ accounts.
Accrued Accounts for Incorporated Community Groups
Accrued Accounts for an incorporated ‘not-for-profit’ organisation should include:
a Directors' report (with a business review if the company does not qualify as small)
an income and expenditure account
a balance sheet (signed by a Director)
Notes to the Accounts