CIC & Charity Accounting Services UK

Specialist SORP-Compliant Accounting for Community Interest Companies and Charities

Audit Consulting Group provides advanced CIC and Charity Accounting Services for UK Community Interest Companies (CICs), charitable companies limited by guarantee, Charitable Incorporated Organisations (CIOs), and registered charities operating under Charity Commission regulation.

Charity and CIC accounting is fundamentally different from standard commercial accounting. These organisations operate under enhanced transparency, public accountability and regulatory reporting obligations governed by:

• Companies Act 2006

• Charities Act 2011

• Charity Commission regulations

• Community Interest Company Regulations

• Charities SORP (FRS 102)

• HMRC tax legislation

• Public benefit reporting requirements

Failure to comply can lead to regulatory investigation, funding delays, trustee liability and reputational damage.

Specialist expertise is essential.

Why CIC & Charity Accounting Requires Specialist Knowledge

Unlike standard limited companies, charities and CICs must demonstrate:

• Proper classification of restricted and unrestricted funds

• Public benefit compliance

• Asset lock adherence (for CICs)

• Transparent governance reporting

• SORP-aligned financial presentation

• Regulatory filing consistency across multiple bodies

In practice, we frequently identify organisations that:

• Misclassify restricted grant income

• Fail to properly present SOFA disclosures

• Do not segregate designated funds correctly

• Overlook independent examination requirements

• Miss Charity Commission filing deadlines

Charity accounting is not simplified commercial accounting — it is regulated financial reporting.

The Legal & Reporting Framework for UK Charities and CICs

Charities SORP (FRS 102)

Most charities in the UK must prepare accounts under the Charities Statement of Recommended Practice (SORP) aligned with FRS 102.

SORP governs:

• Income recognition rules

• Grant treatment

• Fund accounting presentation

• Trustee remuneration disclosure

• Related party transaction reporting

• Public benefit statement

• Statement of Financial Activities (SOFA) format

Smaller charities may qualify for receipts and payments accounts depending on income thresholds, but incorporated charities typically require accrual-based reporting.

Charity Income Thresholds & Examination Requirements

Key thresholds include:

• Income under £25,000 – simplified reporting (for some charities)

• Income over £25,000 – accrual accounts required

• Income over £250,000 – independent examination required

• Income over £1,000,000 (or gross assets thresholds) – full audit required

Failure to appoint an examiner or auditor when required may invalidate filings.

CIC Regulatory Obligations

Community Interest Companies must:

• File annual accounts with Companies House

• Submit a CIC34 community interest report

• Comply with dividend cap rules (for CICs limited by shares)

• Demonstrate community benefit

• Respect the statutory asset lock

Misreporting dividend caps or failing to demonstrate community benefit may trigger regulator intervention.

Our CIC & Charity Accounting Services

1. SORP-Compliant Annual Accounts Preparation

We prepare:

• Statement of Financial Activities (SOFA)

• Balance sheet

• Cash flow statement

• Notes to the accounts

• Trustee report

• Public benefit statement

• Independent examination coordination

All accounts are aligned with Charities SORP (FRS 102) and regulatory expectations.

2. Fund Accounting & Restricted Fund Management

We implement structured systems to track:

• Restricted grants

• Unrestricted funds

• Designated reserves

• Endowment funds

• Grant expenditure allocation

• Programme cost reporting

Proper fund segregation is critical to avoid regulatory challenge.

3. Charity Commission & Companies House Filings

We manage:

• Charity Annual Returns

• Companies House Confirmation Statements

• Statutory account submissions

• Trustee updates

• CIC34 filings

• Regulatory correspondence

Timely filing avoids penalties and compliance notices.

4. HMRC & Tax Compliance

Although charities benefit from certain tax exemptions, compliance remains essential.

We assist with:

• Corporation tax filings (where applicable)

• Gift Aid registration and claims

• VAT registration and partial exemption

• Payroll and PAYE compliance

• Grant income tax treatment

Incorrect Gift Aid claims can trigger HMRC review.

Advanced Technical Considerations in Charity Accounting

Income Recognition Under SORP

Charities must distinguish between:

• Performance-related grants

• Entitlement-based income

• Conditional funding

• Donor-restricted contributions

Recognition timing impacts reported surplus and fund allocation.

Presentation of SOFA

The Statement of Financial Activities must:

• Separate restricted and unrestricted funds

• Present charitable activities by classification

• Distinguish trading subsidiaries (if applicable)

• Disclose governance costs appropriately

Improper SOFA presentation is a common compliance issue.

Reserves Policy & Trustee Disclosure

Charities must explain:

• Level of reserves

• Reason for holding reserves

• Future financial sustainability plans

Failure to justify reserve levels may attract Charity Commission queries.

Common Compliance Failures We Identify

From experience working with UK charities and CICs, common issues include:

• Incorrect treatment of restricted grants

• Failure to update trustee reports

• Missing related-party disclosures

• Incomplete independent examination

• Inaccurate Confirmation Statements

• Dividend cap miscalculation (CICs)

• Lack of documented public benefit explanation

These errors are avoidable with structured oversight.

Case Study 1 – Medium-Sized Charity (£450k Income)

Issue: Misclassified restricted funding resulted in overstated unrestricted surplus.
Risk: Potential Charity Commission inquiry.
Action: Full fund reconciliation, SOFA correction, trustee training.
Outcome: Compliance restored, no regulatory escalation.

Case Study 2 – CIC Limited by Shares

Issue: Dividend cap miscalculation following new share issuance.
Risk: Breach of CIC regulations.
Action: Dividend recalculation, regulator-aligned reporting, governance review.
Outcome: Corrected filing and regulator acceptance.

Case Study 3 – Grant-Funded Organisation

Issue: Late independent examination appointment.
Risk: Delayed annual filing and funding complications.
Action: Accelerated examination process and structured compliance calendar.
Outcome: Filing completed within grace period.

Trustee & Director Responsibilities

Trustees and directors are legally responsible for:

• Maintaining accurate accounting records

• Safeguarding charitable assets

• Ensuring public benefit compliance

• Filing accurate annual returns

• Acting in beneficiaries’ best interests

Failure may result in:

• Official warnings

• Personal liability

• Trustee disqualification

• Reputational damage

Professional accounting significantly reduces governance risk.

Filing Deadlines – What You Must Know

• Charity Commission Annual Return – typically within 10 months of year end

• Companies House accounts – within 9 months of year end (for companies)

• Confirmation Statement – annually

• CIC34 – annually with accounts

Missing deadlines may trigger penalties and regulatory review.

Banking, Grant & Due Diligence Impact

Grant providers and banks assess:

• Financial transparency

• Compliance history

• Governance documentation

• Restricted fund treatment

• Annual reporting consistency

Accurate accounting strengthens funding credibility and reduces due diligence friction.

Benefits of Working With Audit Consulting Group

We provide:

• Specialist SORP-compliant accounting

• Deep regulatory understanding

• Structured compliance calendars

• Transparent reporting frameworks

• Trustee-level advisory support

• Risk mitigation and governance strengthening

CIC & Charity Accounting requires technical expertise, not generic bookkeeping.

Nationwide CIC & Charity Accounting Services

We support charities and CICs across:

London
Manchester
Birmingham
Leeds
Bristol
Liverpool
Sheffield
Nottingham
Edinburgh
Glasgow

Secure digital systems allow structured nationwide support.

Extended FAQ – Advanced Charity Accounting

What accounting framework applies to charities?

Most follow Charities SORP (FRS 102).

When is an independent examination required?

Generally when income exceeds £250,000 (subject to asset thresholds).

Do CICs follow SORP?

CICs follow standard UK GAAP but must file a CIC34 report.

Can charities pay trustees?

Strict rules apply; disclosure is required.

What happens if accounts are filed late?

Regulatory notices and reputational risk may follow.

Do trading subsidiaries affect reporting?

Yes. Consolidation and disclosure rules may apply.

Secure Your CIC & Charity Compliance Today

Accurate, SORP-compliant financial reporting protects trustees, directors and beneficiaries.

Audit Consulting Group provides specialist CIC & Charity Accounting Services ensuring:

• Full regulatory compliance

• Accurate fund accounting

• Proper Charity Commission filings

• Transparent governance reporting

• Reduced trustee risk exposure

• Stronger grant and banking credibility

If your organisation requires specialist CIC or Charity Accounting services in the UK, request a structured compliance consultation today.

Ensure transparency.
Ensure accountability.
Ensure regulatory confidence.