Charities can take many legal forms, the most common being trusts, limited companies and charitable incorporated organisations (CIOs and SCIOs in Scotland). Together with the size of the charity, this affects the format of their annual report and accounts and therefore whether a financial statement audit is required or not.

This is a complex area and interactive decision tree flowcharts are available within Navigate Audit to help with application of the requirements in practice.

Under the Charities Act, charities (including charitable incorporated organisations) with income of less than £250,000 may prepare ‘receipts and payments accounts’, which are a simplified format of accounts.

All other charities must prepare their accounts on an accruals basis that comply with FRS 102 and the FRS 102 Charities SORP, in conjunction with the SORP information sheets.