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How long do charity accounts need to be kept for?

The Charities Act 2011 states that charities must keep proper accounting records with specific details that can properly demonstrate the transactions of the charity. This enables the general public and donors to see what the charity is doing and spending money on in their annual report.
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How long do you keep charity accounts?

The Charities Act 2011 specifies that charities must keep their accounting records for at least six years from the end of the financial year in which they are made. If the charity ceases to exist within the six-year period, then the last trustees of the charity should continue to preserve the charity accounts. Records can be disposed of if the Commission consents in writing.

What type of records do you need to keep?

The accounting records kept by the charity must be able to show and explain transactions by doing the following:

  • Show the money received and spent by the charity day-by-day
  • Record assets and liabilities of the charity
  • Disclose the financial position of the charity at any time
  • Produce a statement of account that’s in line with the regulations

Examples of records that charities should be keeping are explained below:

Cash book recording day-to-day income and expenditure

A cash book is a record of a charity’s transactions (income and expenditure) which explains what each of the transactions is related to. Cash books should be updated daily or weekly to keep track of every transaction that occurs. If your charity has multiple bank accounts, then a separate cash book should be created for each account. 

Charity accounting software can make keeping track of daily income and expenditure easier than ever. AccountsIQ ensures software is easily accessible, making it a simple task to keep track of financial transactions and performance.

Bank statements which are reconciled regularly

Keeping track of bank statements is important for both the charity to understand their transactions and to produce an accurate annual report. Bank statements should be regularly input into a charity’s cash book to ensure all transactions have been recorded. This reconciliation will ensure that there’s no missing or unexplained income or expenditure.

Bank statements are important evidence of transactions and are used to produce the annual report.

Supporting evidence of income and expenditure

In order for a charity to produce reliable reports, it needs to be able to provide supporting evidence at any time it’s asked to disclose its financial position. This means that any income or expenditure needs to have the corresponding supporting evidence. Vouchers, invoices, receipts and bank statements are all forms of evidence depicting transactions. 

Keeping accurate and reliable accounting records is essential for any charity. It enables you to stay on top of finances whilst being prepared to disclose information at any time. As a result, your charity will be seen as reliable and able to efficiently produce financial reports without struggling to find relevant information.

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