At regular intervals throughout the year, reports summarising the financial position (often referred to as management accounts) should be produced and considered by the management committee or board. The purpose of this is to allow the management of the organisation to manage it from a financial point of view. This could include alerting management to financial problems, but could also highlight areas of opportunity.

At the end of the year, annual accounts should provide ‘an account’ of what has happened financially over the last financial year. They can have a similar purpose to management accounts, but will almost certainly be needed by regulators as well. Because of that, whilst management accounts can be in any format which is useful to management, annual accounts will need to show specific information in a specific way. Which parts of the law govern an organisation’s accounting depends upon its legal structure, and organisations are advised to look at the requirements set by the body that regulates it.

Funders will have their own requirements. Some will be similar to the legal requirements, but some – and especially public sector funders – may have additional requirements

As well as annual accounts, many organisations take the opportunity to produce an annual report. Best practice in this area is the Charity Commission’s Statement of Recommended Practice (SORP), which requires a transparent ‘narrative’ to accounts. This is widely regarded as best practice not just for registered charities, but for all voluntary and community organisations. SORP is reviewed regularly, with the Charity Commission website carrying the most up to date version.