Related Party Transaction Reporting in Charity Accounts

Trustees must always act in the interests of their charity and not for their own personal benefit, but it is not uncommon for conflicts of interest to arise. It is important the charity is open and transparent in such situations, and it is good governance to handle these conflicts appropriately.

In charity accounts, the reporting of related party transactions is integral to complying with the SORP and providing details about their transactions with persons and entities closely connected to the charity or its trustees.

The Charity Commission has recently undertaken a review of a sample of Charity accounts and although reporting was found to be significantly better in larger charity accounts, less than two thirds of the charities in lower income samples fully complied with the SORP’s transparency requirement.

Charities preparing accruals (SORP) accounts must disclose:

  • trustees’ remuneration and benefits
  • trustees’ expenses
  • transactions with those persons and entities that are closely connected to the charity or its trustees, referred to as related parties

Trustees may delegate accounts preparation to charity staff or their accountant but remain responsible for approving the trustees’ annual report and accounts. The independent examiner or the auditor cannot be expected to know all of the related parties involved with the charity and so trustees need to co-operate with them to ensure that the disclosures provided in their accounts are complete.

If you have any questions on charity reporting, please do not hesitate to contact one of the charity specialist team at MHA Moore and Smalley.

Income recognition for charity

In this video Nicola Mason and Sarah Ollerton are discussing when a charity becomes entitled to recognise it’s income.

In the case of a grant, evidence of entitlement will usually exist on the offer of funding. That being said, some grant offers will contain terms and conditions which must be met before the charity is entitled to recognise this income.

Watch to find out more!

Our annual CSR results for 2019 are in!

We have had another fantastic year at MHA Moore & Smalley. After sending out the survey to over 4200 clients, we have received an overall satisfaction score of 96%, a 1% increase on last years, already great, result.

This score is based on clients’ answers in response to questions that rate us in terms of communication, technical ability, commitment to each individual business, and our CRM.

Thank you to everyone who got involved. Delivering outstanding client service is at the heart of everything we do. Therefore it is wonderful to know that we are delivering on our mission, vision and values, as we continue to improve and strive to be the best we can be.

Take a look at this year’s results below

Are your Charity details up to date?

Since November, all registered charities in England and Wales have needed to check and update their details before submitting an annual return.

Trustees have a legal obligation to keep the details on the charity register accurate and up to date. This helps maintain public trust and confidence in the charity sector and enables the Charity Commission to contact all charities with any new and important regulatory information.

There are a number of changes that Trustees should be aware of:

  • Trustees will not be able to add a public display name on the charity register. Their full legal name will show to the public.
  • Trustees need to check that the details for their charity’s trustees remain up to date. This includes adding any new trustees and their contact details.
  • All trustees will need to provide their email address or confirm that they do not have one.
  • Trustees will need to provide details of all their charity’s UK bank/building society accounts. This information will not be available to the public.

It is beneficial to complete all the above steps now rather than waiting until the annual return requires submission when obtaining all the necessary information could be time consuming.

If you have any further questions on the requirements of the Charity Commission, please do not hesitate to contact Jack Steer or another member of the charity team at MHA Moore and Smalley.

Please contact Jack Steer on 01524 620 81 or by email at

Trustee Charity Finance Competency

MHA in conjunction with Charity Finance Group have recently published the results of a survey of charity trustee competencies with a focus on finance.  In the light of the increasing responsibilities and expectations of trustees, it makes for interesting reading.  

The survey has reviewed answers to questions regarding a number of topics including how well the Board understands the strategic financial governance of the charity and the breadth of understanding.  The results suggest that further improvement is required in trustee understanding of financial governance and that all board members, not just the treasurer should be engaged with the charity finances.

Given the need for increased understanding, it is surprising that there has been a reduction in the number of charities making charity finance training available to trustees.  The assessment of board skills and performance forms part of the guidance in the Governance Code and there has been a small reduction in charities formally assessing board competencies in charity finance.  If this was done robustly and identified training needs identified and satisfied it would help to improve the understanding of Trustees and the performance of charities.

If Trustees had a look at the Governance Code last year and have not reviewed it since, it would be useful to have a review of progress made and identify any further improvements.  

Please click here to view the previous years Governance Code

Gift Aid

Charities often encourage donations by giving a small reward to their donors. This could be anything from stickers and keyrings to teddy bears. Where the reward is more than a token value, this needs to be measured and assessed against value thresholds to make sure that gift aid can still be claimed. The benefit value thresholds have been simplified slightly from 6 April 2019, reducing the thresholds from three to two. The new limits will be:

 • For donations up to £100: 25% of the value of the gift (as before)

 • Donations over £100: £25 plus 5% of the excess over £100

 • Maximum annual benefit £2,500 (as before)

The Gift Aid Small Donations Scheme (SDS) allows charities to claim a gift aid type benefit of 25% of donations without requiring a personal declaration. Until now, the maximum donation under SDS has been £20. This limit will increase in April to £30.

The Gift Aid Small Donations Scheme helps charities who undertake impromptu small donations, eg from bucket collection.  The increase in the limit also now aligns the limit with the maximum contactless payment allowing charities to take full advantage of this type of giving.

Nicola Mason

Professional: Nicola is a senior manager in the audit department with particular responsibility for a large number of charitable and not-for-profit organisations, including a number of academy schools. She has advised on systems and procedures and financial reporting, as well as managing year end audits.