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Accounting for Charity's

  • Member PM.Dip
  • 9 posts
  • # 116561

I am hoping to work for a new client who is a charity does anyone have some knowledge of the main differences in accounting that I will need to consider?

Many Thanks in advance for your words of wisdom 

  • Fellow PM.Dip
  • Practice Licence
  • 104 posts
  • # 116562

Hi Tracy

I would assume that you will just be dealing with the day to day bookkeeping rather than preparing the annual accounts - as the bookkeeping side tends to be quite straightforward, whereas preparing the accounts not so and in my opinion should be looked after by an accountant.

I do the bookkeeping for a charity and they use Sage. The main difference is where they have restricted and non-restricted funding. That basically means that some of their funding can only be spent on certain costs that are stated when the funding (grant) is given. For example, they may receive funding from a foundation that is for a new office. The charity can spend the funding on items relating to the office and nothing else. Whereas another amount received might have no restrictions and can therefore be spent on anything.

It's this element that can be fiddly (not difficult) as you have to make sure all costs are allocated correctly so that under/over spends are accounted for, as some funding is given on a use it or give it back basis.

The charity I work with has the majority of its funding on a restricted basis so I have to prepare a quarterly P&L across the different funding pools.

It can be an interesting area to work in.

Good luck!

  • Companion Fellow
  • Practice Licence
  • 1126 posts
  • # 116568


Make sure they sign your letter of engagement before you start doing any work.   Charities are well known for bleeding bookkeepers dry in time and emotion.   The top board are always paid and so should you be.

Most bookkeepers I know stay away from Charity bookkeeping for that very reason.  I am in the business 20 years and I will never ever do work for charities again.    

That does not mean I am not charitable, just not when people are taken for mugs.   Smile

This is a personal view. 

Edited at 06 Apr 2018 02:44 PM GMT

  • Member PM.Dip
  • Practice Licence
  • 24 posts
  • # 116603

I do the accounts for the local scouts on a voluntary basis - my 2 sons have been through beavers, cubs and scouts and it's a great way of giving something back to my local community.

They are a charity in their own right, so I also prepare and file the annual charity commission return. It's very straightforward, and we've had the accounts independently verified each year. The person doing this has been very happy with what I've prepared (compared to the previous incumbent, who was also good, but didn't have my detailed bookkeeping knowledge).

However, I absolutely take the point that some charities are more complicated, but this is not necessarily the case. As with any client, it's best to find out exactly what is involved before committing.


  • Companion Fellow
  • Practice Licence
  • 1126 posts
  • # 116606

Hi Alison 


We have all donated our time to Charities re bookkeeping of our choice to help them out.  I still do. 


However if your practice is choosing to specialise in charities,  do not let them pull the charity card while everyone else gets paid. 

If they what your services they need to pay for in full.   So a letter of engagement is extremely important.  Charities are notorious for bullying bookkeepers be warned, and if you do it for free, it still comes under your licence and professional practice and you have to do the MLR regardless if you are providing this for free. 

The charity status in the UK is an absolute disgrace.    How can a private school have a charity status when they flounder the rules.  Some of the listed charities in the UK should be embarrassed to call themselves a charity.   Under no circumstances in my eyes is a private school a charity.      


Edited at 18 Apr 2018 08:35 PM GMT

  • Member PM.Dip
  • 9 posts
  • # 116627

Thanks all for your advice on this one. In the end the job didn't pan out maybe a good thing from the responses I received...?

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