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Charities - financial reporting and scrutiny (Scotland)

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Published: 12 Oct 2018 Reviewed: 19 Feb 2020 Update History

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Technical helpsheet issued to help ICAEW members to understand key requirements relating to the financial reporting and scrutiny of charities registered in Scotland.


This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members to understand key requirements relating to the financial reporting and scrutiny of charities registered in Scotland.

Members may also wish to refer to the following related helpsheets:

External scrutiny

All charities in Scotland require external scrutiny in the form of either an independent examination or audit. External scrutiny requirements for charities are summarised in Appendix 1.


In addition to the statutory requirements outlined in the appendix, an audit may be required by a charity’s governing documents, election by trustees or at the request of a major donor.

Furthermore cross-border charities who qualify for an Independent Examination in England and Wales may nevertheless require an audit to comply with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 as amended. Further guidance for Scottish charities can be found on the website of the Scottish Charity Regulator (OSCR).

Where an audit is required, the auditor should refer to the ICAEW guide on Preparing an audit report for a charity.

Independent examination

Provided an audit is not required, Scottish charities may opt for an independent examination instead of an audit.

Where receipts and payments accounts are prepared, the independent examination can be carried out by a person with requisite skills. The independent examination of “fully accrued accounts” (i.e. accruals accounts) must be undertaken by a member of one of the following professional bodies:

  • Institute of Chartered Accountants in England and Wales;
  • Institute of Chartered Accountants of Scotland;
  • Institute of Chartered Accountants in Ireland;
  • Association of Chartered Certified Accountants;
  • Association of Authorised Public Accountants;
  • Association of Accounting Technicians;
  • Association of International Accountants;
  • Chartered Institute of Management Accountants;
  • Institute of Chartered Secretaries and Administrators;
  • Chartered Institute of Public Finance and Accountancy;
  • Association of Charity Independent Examiners;
  • Institute of Financial Accountants;
  • The Auditor General for Scotland; or
  • Has been appointed by the Accounts Commission for Scotland.

Whether members of these professional bodies are in a position to accept an appointment as an independent examiner will be determined by the practicing certificate regulations of each of the professional bodies. Guidance on whether a member can undertake such an examination can be found in the helpsheet Can I undertake an independent examination of a charity? Advice should be sought if in any doubt.

Further guidance on carrying out an independent examination can be found in OSCR’s publication Independent Examinations for Charities and Independent Examiners.

Basis of preparation

Most charities are required to prepare their accounts on an accruals basis. Non-company charities with gross income below £250,000 may instead opt for the preparation of receipts and payments accounts, provided that the charity’s governing documents allow it and accruals accounts are not a condition of any donations or grants.

All charitable companies and Co-operative and Community Benefit Societies are required to prepare accruals accounts, as are all non-company charities with gross income in excess of £250,000.

The OSCR defines gross income in its publication A guide to charity accounts as the total incoming resources of the charity in all restricted and unrestricted funds but excluding the receipt of any donated asset in a permanent or expendable endowment fund. Any income that has been collected specifically for, and passed onto, a third party (e.g. that part of a membership fee that is passed onto a parent body, or a collection held for another charity) should be excluded. However, the transferred amount should be recorded by way of a note to the accounts.

There is no concept of pro-rating the income threshold in the Charities Accounts (Scotland) Regulations 2006 when the accounting period is not 12 months. The financial reporting requirements of charities are summarised in Appendix 1.

Receipts and payments accounts

OSCR has produced guidance on using the receipts and payments basis for the preparation of a charity’s accounts in the Receipts and payments accounts work pack.

Cross-border charities will also need to comply with the formal requirements for the content of receipts and payments accounts under the regulatory regime in Scotland.

Accruals accounts

Charities preparing their accounts on the accruals basis must use FRS 102 (September 2015), the Charities SORP (FRS 102) and the Charities SORP (FRS 102) Update Bulletin 1 unless another SORP is more appropriate. Additionally, for periods commencing on or after 5 October 2018, Section 3 of the Charities SORP (FRS 102) Update Bulletin 2 must also be applied.

For periods commencing on or after 1 January 2019 (or if the triennial review amendments are early adopted), charities preparing their accounts on an accruals basis will instead apply FRS 102 (March 2018) and the Charities SORP (FRS 102) (second edition - October 2019), unless another SORP is more appropriate.

Charities are excluded from the micro entity regime and are therefore unable to apply FRS 105.

There is an exemption for smaller charities from the preparation of a statement of cash flows as only ‘larger charities’ (those with gross income exceeding £500,000) are required to present one (see Does a charity need a cash flow statement?). There are also other exemptions for smaller charities (those with gross income of £500,000 or below) with regard to the content of the trustees’ report.

Group accounts

Group accounts for parent charities are required if the aggregate gross income is greater than £500,000. Under the Charities Accounts (Scotland) Regulations 2006, there is no pro rating the threshold for periods that are not a year in length.

Filing deadlines

Charities are required to file their accounts and annual return with OSCR and in the case of charitable companies are also required to file their accounts with Companies House.

Charities must file their accounts and annual return with OSCR within 9 months of the year end.

If in doubt seek advice

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Technical Advisory Service on +44 (0)1908 248 250 or via webchat.

Appendix 1 - External scrutiny and other requirements (Scotland)

Unincorporated Company
Annual return
Applies to all irrespective of income with a supplementary return from all charities with an income over £25,000
Trustees' annual report and accounts
Applies to all irrespective of income
Receipts and payments accounts 
Gross income does not exceed £250,000
All companies must prepare accruals accounts irrespective of income
Gross income does not exceed £250,000
Accruals accounts
Gross income in excess of £250,000
Gross income in excess of £250,000
Group accounts threshold
 Required if aggregate gross income (after eliminating consolidation adjustments) is in excess of £500,000.
Independent examination by person with requisite skills
 Gross income not exceeding £250,000 but only for receipts and payments accounts
Independent examination by professional accountant
Gross income in excess of £250,000 but not exceeding £500,000
Audit threshold
 Gross income in excess of £500,000
Gross income in excess of £250,000 and gross assets in excess of £3,260,000
Accruals accounts and gross assets in excess of £3,260,000
Filing deadline
Filing with the OSCR within 9 months of the financial year end
Terms and conditions

© ICAEW 2024  All rights reserved.

ICAEW cannot accept responsibility for any person acting or refraining to act as a result of any material contained in this helpsheet. This helpsheet is designed to alert members to an important issue of general application. It is not intended to be a definitive statement covering all aspects but is a brief comment on a specific point.

ICAEW members have permission to use and reproduce this helpsheet on the following conditions:

  • This permission is strictly limited to ICAEW members only who are using the helpsheet for guidance only.
  • The helpsheet is to be reproduced for personal, non-commercial use only and is not for re-distribution.

For further details members are invited to telephone the Technical Advisory Service T +44 (0)1908 248250. The Technical Advisory Service comprises the technical enquiries, ethics advice, anti-money laundering and fraud helplines. For further details visit icaew.com/tas.

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  • Update History
    01 Oct 2018 (12: 00 AM BST)
    First published
    22 Mar 2024 (12: 00 AM GMT)
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