As charities we are expected to report clearly and fully on the money we receive and spend. The Charity Commission has clear rules on how charities should account for their finances, and for reporting these accounts. As charities, PCCs need to comply with this guidance.
Two different methods of accounting are permissible, depending on the gross income of the PCC (click here to find more about the definition of gross income, and about other requirements that are linked to the income of your PCC). As well as the guidance on this site, ‘PCC Accountability: The Charities Act 2011 and the PCC” is a book containing the accounting advice. The 5th edition will be available from Mid February as both a book and in online form. For now you are able to access a pdf of it here. (Please note: this is a pre-publication version that may contain some minor typographical errors. The book and a final online version will be available from February).
Receipts and Payments Accounts
If the Gross Income of your PCC is less than £250,000 you can choose to prepare your accounts on a “Receipts and Payments” basis. This is a simpler form of accounting which records money moving in and out of the PCC’s bank accounts during the financial year.
Click here for guidance on preparing Receipts and Payments Accounts
Parishes with gross incomes greater than £250,000 must produce accounts on the “accruals” basis, which provides a more accurate view of the PCC’s financial position. Smaller parishes may choose this option, particularly where the treasurer has a broader knowledge of accounting practice. For accruals accounts, all financially valuable resources and their movements are shown. These accounts include a value for fixed assets such as buildings; vehicles etc and these assets are reduced in value as they depreciate or else are re-valued annually. Note that guidance has changed for 2016 accounts.
Click here for guidance on preparing Accruals Accounts.
Producing the Trustees Annual Report
With each year’s accounts, you must present a Trustees’ Annual Report. This will often be led by the PCC Secretary or the Incumbent. The Charity Commission has issued some rules on what must be covered.
Click here for guidance on writing the Trustees’ Annual Report
Your accounts will need to receive external scrutiny. Most PCCs should be independently examined, although the largest PCCs will require a full audit.