Hi, I'm confusing myself and would appreciate some help. The charity I work for has recently change dthe way they operate. Their income is less than £250k and
they want their accounts done on a Receipts and Payments basis rather than accruals, which is the way it has always been done up until now.
So, I'm now preparing year end accounts to be examined. In the prior year, there are Sales which would have been included as Income for which we would have received payment in the current financial year. So, in order for me to state what our income is in the financial year just ended, is it correct that it is all cash received as income less that received on relation to previous years sales? So for this first year, income will appear less?
-- Edited by Flier109 on Monday 10th of April 2017 08:17:36 PM
Yes, they don't expect to exceed the threshold at any time. No VAT. I use QBO for processing all transactions. All quite simple really, apart from restricted funds. Scottish charity.
Are there any vehicles? Yes you don't want to tax income twice, nor claim deductions for expenses twice. Much of this comes down to when X happened, what invoices were outstanding and included under accruals.
__________________
Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Sorry was bombed and going to be the same the next day or two (thats what comes of short official working weeks when we can get hold of people I guess!)
Anyway Johnny has raised a point about the 'cash basis' which means that you cannot claim depreciation. So just to double check given you talk restricted funds - will any of the past/targeted funders actually provide funds to you if you are not working on the accruals basis? There are a lot who will not. So just before you do - what was the reason for changing? Has it been scoped through properly.
Am assuming that the Scottish charity regulators work on the same basis as the English charity commission.
Does Quick books help provide any info?
If not then I will get back to this but it will be weekend at the earliest.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Whizz down to the 'entering cash basis'. I know it says its about tax, but the theory is the same.
Although that said I, given you are using quick books online and they provide a freebie helpline I would be asking them if there is a button that can be pressed that does all the work for you. I know QBs desktop seem to do, although if it was such a product I would be encouraging you to take a back up and test the process out to ensure you dont need any manual adjustments. For QB online I would ensure the year has rolled over into teh new one and I would probably still run it through a trial file 9you can just do that via setting up a freebie trail and importing your data Im sure (or even just putting a few manual bits in then changing the process.
HTH (and sorry for the kop out link!!)
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Firstly, what I'd do is write a report detailing why it is best to remain within the accruals basis - of course it can go into the recycle bin, or if printed, start a fire.
If the board have already decided then I guess it is what it is. But as a professional we are paid for our insights too?
Hands up, I've no idea if a charity can, or can not do this - out of scope for me on that.
(Great links from Joanne, as usual :) )
As Joanne has mentioned, depreciation = no.
What is it the charity is involved with? I imagine it has a decent sized office? Computers, tablets etc.
Cars - remember if CA have been claimed on vehicle X, it has to stay that way until the vehicle has been disposed of, no mileage allowance is permitted.
If I remember correctly, outstanding TWDV's are treated as purchases when moving from accruals to cash basis. I would mention stock, but I doubt a charity would have any - I could obviously be wrong.
I've only known (personally) businesses go from cash to accruals.
As we don't know the name of the charity, can I ask what is the reason for the change?
(In bold could be wrong - quoting, or mis-quoting from memory)
__________________
Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
