Accounting for charities and CIOs

Charity accounting is not business accounting with kinder vocabulary. It runs on genuinely different rails — fund accounting, the Charities SORP, trustees' reports, independent examination — and treating a charity's books like a small company's books is how well-meaning treasurers end up with a qualified examiner's report and a difficult trustees' meeting.

Whether you are a charitable trust, a charitable company or a CIO — a Charitable Incorporated Organisation, the incorporated form designed specifically for charities — the same themes decide whether your accounting is sound.

What makes charity accounting its own discipline

Restricted funds are the heart of it. Money given for a stated purpose — a grant for the youth programme, an appeal for the roof — is restricted: it must be spent on that purpose and tracked separately from general funds, alongside any designated funds the trustees have earmarked themselves. Fund accounting is the discipline of keeping every pound's purpose attached to it all year. It cannot be reconstructed at year end; it either happens as transactions are recorded or it does not happen.

The SORP shapes the accounts. The Charities SORP — the Statement of Recommended Practice — governs how charity accounts are prepared and presented where accruals accounts are required. Smaller non-company charities may instead be able to prepare simpler receipts-and-payments accounts; which regime applies depends on your income and structure, and the thresholds are set out in Charity Commission guidance. Knowing which side of the line you sit on is the first question, not an afterthought.

Scrutiny scales with size. Depending on income (and sometimes assets), a charity's accounts may need an independent examination or, at larger sizes, a full audit. The thresholds are published by the Charity Commission — check the current figures. Good bookkeeping does not remove the requirement, but it is the difference between scrutiny as routine and scrutiny as ordeal.

Reporting is to the public, not just the taxman. Annual returns to the Charity Commission, a trustees' annual report, accounts on the public register — a charity's paperwork is part of its trustworthiness to donors and funders.

Tax is different, not absent. Charities enjoy significant tax reliefs but must still get Gift Aid records right, watch the boundaries around trading, and claim what they are entitled to. "Charities and tax" on GOV.UK is the starting point; tidy records are what make any of it claimable.

How we support charities

Our platform keeps the underlying records continuously — every receipt, grant instalment and payment captured as it happens, every entry passing through one discipline: AI drafts. AgentLedger validates. People approve. For charities, the human layer carries the fund-accounting judgement: which fund each transaction belongs to, so restricted money stays visibly restricted and your examiner, trustees and funders can follow every pound.

We are equally plain about boundaries: where your size requires an independent examiner or auditor, that is a distinct appointment — our job is to hand them records worth examining. Charity engagements are quoted individually, because a village hall CIO and a six-figure grant-funded charity are not the same job, and pretending otherwise would shortchange one of you.

What happens when you ask for details

1. You tell us about the charity. Structure (trust, charitable company, CIO), rough income and where it comes from, and what scrutiny your size triggers. No documents needed yet.
2. We confirm scope and price. In writing: what we would handle, where an examiner or auditor fits, and the exact price for your situation.
3. You decide. No payment is taken at this stage, and an enquiry is not an acceptance — it simply gives your trustees the facts to decide with.

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