Getting your charity ready for year end

For many charities, 31 March 2018 will be the next financial year end to contend with.

As charity specialist accountants and advisors, we understand the challenges faced by finance teams in the Sector when getting ready for year end – whether that be audit or Independent Examination.

This article explores top tips for year-end preparation and will hopefully provide a useful insight in to what you can do to make your next year end review proceed more smoothly.

Best laid plans

With each annual compliance cycle and the accompanying scrutiny of our clients’ internal financial controls and processes, we hear the following things;

“We intend to sign off the accounts at the June/ July board meeting this year”

Every year you start out with the best of intentions – “this year will be the year that we file early!”. However, we also understand that the best laid plans do not always come to fruition.

  • Trustees have summer holidays too.
  • The Trustees Report is waiting on input from various department heads.
  • The finance manager has been off sick and so the timetable needs pushing back.
  • A major funding bid requires the focus of the management team and the management accounts to the year end have not yet been signed off.

The list goes on. The timetable slips and before you know it you are signing off the month before the AGM in October.

What does your accountant expect?

I am sure that each year your accountant provides you with a Sector specific list of what is needed in order for them to be able to carry out their work, sometimes called a ‘deliverables’ list.

Extremely useful as a checklist, you can review, annotate and pass to your accountant to show that you have provided everything they asked for upfront.

Here is an example of a ‘deliverables’ list for an Independent Examination client who is not VAT registered

Please note that this is an internal document used by Gerrard Financial Consulting only and is not intended to be a full or comprehensive list, merely an example of the sorts of things we may request from our clients.

As a minimum, your accountant will expect everything on an agreed deliverables list to be presented in advance of commencing work, usually by a mutually convenient agreed date.

Failure to provide all information within agreed timescales could mean that your accountant might need to delay work on your affairs due to other client commitments (which might not be ideal for you and scheduled board dates etc).

Top tips for getting it done (and on time)

Below are just a few, in my opinion, of the key areas for consideration to ensure that you are well prepared for your year-end review (and less likely to incur additional fees from your accountant):

  • Trustees Annual Report (TAR)

Present this to your accountant at the outset! We regularly hear; “but it’s just the narrative, surely it won’t hold up your work!” – at which point we explain that any reporting accountant has a duty to consider whether the TAR is consistent with the financial information being reported. Reading the TAR first also sets an expectation for how the finances may read as your accountant will have a better understanding of what has gone on during the accounting period.

Wanting to be efficient in handling your affairs at every stage, your accountant may well say that they won’t start work until this has been received (see deliverables above).

Top tips for getting your TAR ready on time:

  • Write your TAR content during the year by keeping bulleted notes – perhaps monthly
  • The fundraisers in your organisation will usually have lots of resource available throughout the year – e.g. pics, event reports, stories. Why not obtain a summary at the time of an event, for example, and tuck this away for your TAR content come year end?
  • Get a draft distributed to board members for comment early. That way, the copy which goes to your accountant is nigh on final, bar a few late minor changes – for example financial disclosures.

See the links below to two previous pieces of guidance on how to write your TAR:

Part 1

Part 2

  • Opening balances – Check opening balances on your computer system agree to last year’s signed accounts. Run a prior year balance sheet and compare. Whilst this may sound obvious, you would be surprised by how many organisations have accidently posted in to last year or not updated their closing balances correctly. This could mean more work for your accountant – and potentially more fees for you.
  • Balance sheet reconciliations
    • Further to the above, have opening balance reversals been done and have you updated to your current year end position? For example, we commonly see accruals and prepayment balances which are last year’s balance brought forwards. By not reversing these at the start of the year and moving these amounts in your management accounts, the SOFA is likely to be misstated – albeit potentially immaterially for a smaller organisation.
    • It sounds obvious, but have you performed a ‘sense check’ on your year-end figures? Common areas we come across containing errors are:
      • Payroll liabilities – the net wages control and or the PAYE control accounts on the balance sheet are not reflecting the year end net wage or PYE position, due to a misposting via the SOFA. It takes two minutes to check that any liability stated here is what you paid the following month, for example.
      • Bank reconciliations – balance sheet figures are misstated due to old or unpresented items never having been cleared down. Review your reconciliation reports and ensure that any timing differences are current. If not, resolve.
      • Fixed assets
        • have you calculated your annual depreciation correctly on your fixed asset register? Have you entered it to the accounting system?
        • Have you accounted for any profit/ loss on disposal of assets in the year?
      • Netting off income and expenditure – have you checked your SOFA nominal ledger accounts to ensure that there has been no accidental offset of income against expenditure in the year, in line with SORP requirements? Netting off is not permitted for charities. Common areas where this occurs sometimes include fundraising events where a nominal represents net proceeds rather than grossing up income and expenditure via separate nominals, for example.


  • Funds statement
    • Do your funds carried forward make sense? Are they in line with what you think you have left in each pot?
    • Does your funds statement clearly show the brought forward position (agreeing to last year’s signed accounts), income, expenditure, transfers (in year) and the carried forward amounts for each fund?
    • Have you clearly segregated unrestricted, restricted, endowed funds from one another?


  • Transfers between funds
    • Have you moved any core cost contributions from funding pots to your general funds pot (in line with funding agreements of course)?
    • Have you contributed funds from your general funds to any specific projects/ funds in deficit (obviously with such transfers having been approved and minuted at finance subcommittee first for example)

For practical guidance on how to achieve this in your computerised accounting system, see my November 2017 article here.

  • Budgets and forecasts
    • Ensure your budget and cash flow forecasts for the next financial year are approved prior to it starting, where possible.
    • Add going concern as an agenda item to the last board meeting prior to the year end – have a discussion around next year’s budget and cash flow and document the trustees’ views on why the charity continues to be a going concern and/ or any areas of concern which may need addressing, together with an overview of plans to address these areas.


Whilst the above attempts to provide an insight into what might constitute an exemplary start to a year end process, we do understand that – in an ideal world – you would have all the time you need to prepare for year end. We know how much work goes in to getting ready and how frustrating it can be when time is short, or you are asked to divert your attentions elsewhere for a short period.

Lack of time and resource has always been a problem for charities – especially their finance teams. I hope that the above is useful in some way and supports you in achieving a smoother and less stressful year end.

Should you have any questions around the above then please don’t hesitate to comment – I’d be happy to help.

As published by Accounting Web February 2018