Annual Accounts are essentially a report prepared either by your Treasurer or appointed accountant at the end of your group’s financial year, drawing together and analyzing your group’s financial activity over the last 12 months.
Your group’s Annual Accounts will be presented to your members for approval at the Annual General Meeting, and they are important because they:
show members that the committee or board (or Trustees) are managing the organisation’s affairs in a proper manner
show funders that their grants are being spent on the purposes for which they were given
show prospective funders how the group manages its finances (and whether or not it is likely to manage any prospective grants prudently)
show donors how their donations are being used and that they help further the aims of the organisation
foster public confidence in the group and hence encourage ongoing support
If your group has charitable status, your Annual Accounts demonstrate that:
the Trustees are meeting their legal duties and the charity is being accountable and compliant
the charity is being managed in a fit and proper manner, with income being used to further the group’s charitable purposes
Annual Accounts vary in format from the simplest Income and Expenditure sheets to the more complex Accrued Accounts.
The type of Annual Accounts prepared by your group will depend on:
the legal form or structure of your group
your group’s annual income in the period covered
whether or not your group is a registered charity
your group’s own constitution or governing document
any decisions of the Committee or members
These things will also determine whether or not you have a legal requirement to submit your Annual Accounts to a regulatory body.
For Unincorporated Associations that are not registered charities and handling relatively small sums of money over the year, the Annual Accounts can be a simple Income and Expenditure account reconciled to the opening and closing bank and cash balances compiled by the Treasurer.
For Unincorporated Associations with larger incomes OR organisations/groups which are Incorporated, it is advisable to appoint a suitably qualified accountant who can prepare the Annual Accounts in the required format according to correct accounting procedures.
Accounts of small charities preparing Receipts and Payments accounts can be prepared by the Trustees or independent examiner rather than an accountant.