A recent article in the Sunday Post detailed how a large number of charities operating in Scotland have missed important account deadlines.
As well as shedding light on the way that some organisations approach their accounting compliance, the story highlighted the large numbers of charities in Scotland. According to the Scottish Charity Regulator (OSCR), there are currently just over 24,000 registered charities in Scotland.
That is one charitable organisation for every 220 Scottish citizens.
More impressively, the Sunday Post article alleges that the current number of charity Trustees in Scotland is around 183,000. If true, this roughly equates to 1 in every 23 Scottish adults. But why are seemingly so many organisations having trouble keeping to deadlines?
Missed deadlines
According to the article, 2,700 charities have missed key account deadlines and are overdue with their accounts. Around a third of these are thought to be at least 2 years late. This means that a large part of the third sector in Scotland is operating without financial oversight. A sizeable portion of these organisations may be currently in breach of statutory law. The story also seems to point towards the fact that many charities seem to be having problems with their internal governance processes and structures.
We asked one of our Partners, Fiona Haro, for her thoughts:
“Presenting late accounts should ring alarm bells with Trustees. It could be a result of weaknesses in their own internal procedures, but in addition, money is being donated to charities by the general public in good faith and late submission of accounts could jeopardise the public’s goodwill.”
OSCR has introduced new deadlines for filing accounts.
Charity accounts and tax returns
There 2 types of accounts that charities in Scotland might have to prepare:
• receipt and payments accounts (R&P)
• fully accrued accounts
Receipts and Payments accounts are a simpler format for charities that are mainly using cash accounting, while fully accrued accounts are more complex.
An organisation will have to prepare fully accrued accounts if:
• they have a gross income of £250,000 or higher
• the charity is a registered company
• its governing document specifies it should prepare these kinds of accounts
• the funders have asked for them
It is important that charities are allowed to continue the good work they do across our society, but is also important that they abide by the law of the land when it comes to their accounting obligations. The media is full of high profile charity fraud scandals so maintaining public credibility should be an absolute priority for all charitable organisations. Accurate financial management and timely compliance with deadlines will go some way to achieving this. For advice on any aspect of running your charitable organisation, please contact our charity expert Fiona Haro at fharo@thomsoncooper.com or call 01383 628800.