Annual accounts
As the title implies, the treasurer is required to produce an annual statement of accounts for the financial year. The first page can be a simple income and expenditure account shown in a column form with a resulting surplus and deficit. The second page can be a simple balance sheet showing reserves brought forward, adding the year’s surplus or deficit and balancing this with the year end monies held at the bank.
The account can be made much more informative by having the previous year’s numbers as a comparison, as well as further detail about income and expenditure from various activities. Miscellaneous income and expenditure should be kept to a low number as it can hide a wide variety of items. The balance sheet may need to include a property value (maybe an expert valuer needs to be consulted) as well as a value for equipment (this is normally cost but needs to be written down annually via a depreciation charge). The accounts could be supplemented with a written statement highlighting various numbers. These accounts need to be checked by an independent auditor (see below).
Statements of account and all existing accounting records must be preserved for at least six years from the end of the financial year in which they are made, or for such longer period as may be required by H.M. Revenue and Customs.
Further guidance on preparing annual accounts, including specimen accounts, can be found here...
Accounting and audit requirements for groups
The association’s national guidance has been revised to be more consistent with the charity regulators. However, the association has a few additional rules which apply to scout groups, districts and counties. These relate to the external examination of accounts. More details can be found on the following pages on the national site:
Scrutiny, independent examination or audit of accounts
Both the Charities Act and POR detail the minimum requirements for the scrutiny, independent examination or audit of accounts.
It is no longer sufficient to rely on a friend or someone from work looking over your accounts. There are specific requirements based on levels of turnover which in some cases actually specify the qualifications required.
Do ask; you may find that there is someone connected to the Group who is qualified to carry out this task. Remember that they will need to be sufficiently independent. Independence means that the examiner is not influenced, or perceived to be, by either close personal relationships with the trustees of the charity or by a day-to-day involvement in the administration of the charity being examined.
It is easy to recognise that a leader or group trustee board member is not independent, but sometimes less obvious that the spouse or close relative of a leader is not sufficiently independent.
The Scout Association has no set rules about when the financial year end must be. The Association’s own financial year runs from April to March.
TEMPLATE: Scrutineers report
Independent examination of accounts
Before appointing a person as scrutineer, independent examiner or auditor the executive committee will need to ensure that the person has the necessary skills and is sufficiently 'independent'. It is easy to recognise that a leader or group executive member is not independent, but sometimes less obvious that the spouse or close relative of a leader is not sufficiently independent.
Guidance from the Charity Commission for England & Wales states the following:
Who is an independent person?
The short answer
An examiner must be independent of the charity whose accounts are being reviewed. Independence means that the examiner is not influenced, or perceived to be, by either close personal relationships with the trustees of the charity or by a day to day involvement in the administration of the charity being examined.
In more detail
For an examiner to be independent that individual should have no connection with the charity trustees which might inhibit the impartial conduct of the examination. An examiner cannot independently review his or her own work and so the person who is the charity’s book-keeper cannot be the charity’s examiner. However, this does not mean an examiner cannot be a member or supporter of the charity and often some involvement brings an added quality of personal enthusiasm and familiarity to the role of examiner.
Where a potential independent examiner is a member of the charity, for example a member of a church congregation, provided they have not been involved in the day-to-day decision making or administration of the charity, for example by serving on a committee or sub-committee convened by the charity, and are not connected with the charity trustees, then normally they may act as an examiner, subject to their having the necessary ability, experience and qualification required. Also the right to take part or attend as a member in an annual general meeting (AGM) would not preclude the examiner from conducting an independent examination although active participation in the administration of the charity would, for example through tabling resolutions at an AGM.
Whether a connection with the charity affects independence will depend upon the particular circumstances but the following persons will not normally be considered to be independent:
- the charity trustees or anyone else who is closely involved in the administration of the charity
- a major donor to or major beneficiary of the charity; or
- a child, parent, grandchild, grandparent, brother or sister, spouse, civil partner, business partner or employee of any person who falls within 1 or 2 above.
TEMPLATE: Independent examiner's report statement
Further reading...
Charity Commission guidance:
- Independent examination of charity accounts: guidance for trustees (CC31)
- Independent examination of charity accounts: examiners (CC32)
