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Supporting Scotland's vibrant voluntary sector

Scottish Council for Voluntary Organisations

The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB.

Keeping accurate accounts is a vital element in running any voluntary organisation, ensuring that you are making the most of your income and keeping track of where your funds come from and how they are spent. Exactly what you will need to do will depend on the scale of your operation, the legal status and whether or not it is a charity.

Check out the Finance module on our SCOPE E-learning platform for  information and learning on overseeing your organisation's finances.

Your responsibilities

Your voluntary management committee has a responsibility to report on the financial position of your organisation:

  • if your organisation is a charity or is incorporated, this is a legal requirement
  • if your organisation is not a charity and is unincorporated, the responsibility to report is more moral than legal. However, it is common for funders to require the production of proper accounts as a condition of funding.

Find out more about the implications of different legal structures.

Keeping records

Your organisation should keep proper financial records these will record its income and expenditure on a daily basis, formal reports are normally made on a 12 monthly basis and include a comparison of income and expenditure for the previous 12 monthly period.

Many organisations use the public sector financial year (April-March) as their reporting period, some use the calendar year (January-December) you should use a period that best fits with the cycle of your organisation’s activities, e.g. a school year, a football season year.

HMRC require that Accounting records must be kept for a minimum of 6 years after the end of the financial year to which they refer. Some records are of such significance that they should be retained on a permanent basis, e.g. any financial records relating to fixed assets, property, vehicles, machinery, or any transactions of a particular significance.

Requirements on Scottish charities

All Scottish charities are required to prepare annual accounts consisting of numerical information and a Trustees’ Annual Report which is narrative information providing details that cannot be expressed in financial terms.

The Office of the Scottish Charity Regulator (OSCR) has more information on annual accounts and annual reports.

External scrutiny

Whether your organisation needs to have its accounts checked by someone depends on:

  • what your constitution says
  • if it’s a funding requirement
  • if it’s a regulatory requirement.

Under statutory requirements, Scottish charities’ accounts must be externally scrutinised – either by independent examination or audit. The type of external scrutiny depends on the charity’s governing document, gross income and net assets, and whether or not the charity is also a company.

The Office of the Scottish Charity Regulator (OSCR) has more information on independent examination and audit.

Independent examination

An independent examination is an external review of accounts to determine whether they are a fair reflection of the underlying records for the period concerned.

In general, an independent examiner is an appropriate person independent of the trustees who is reasonably believed by the voluntary organisation’s management committee to have the ability and practical experience to carry out a competent examination of the accounts. This could be any person with an understanding of how receipts and payments should be reported on and unless the organisation is a charity which has reached a certain financial level there is generally no requirement for the Independent Examination to be carried out by a professionally qualified individual. Smaller voluntary organisations may find a competent individual who will provide this service for a small fee or even free.

Your local Third Sector Interface may be able to carry out an independent examination for your organisation or have contact information for Independent Examiners in your area.

If a charity has an income above a certain level, or prepares fully accrued accounts, then it must have an independent examination by a member of a listed organisation. The Association of Charity Independent Examiners (ACIE) may be a useful place to start if you are trying to find an Independent Examiner in your area.

An independent examination is less rigorous and costly than an audit, it is a review of the accounting records kept by the organisation and a comparison of the accounts presented with those records. It also includes consideration of any unusual items or disclosures in the accounts and seeks explanations from the organisation’s managing committee concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit, and consequently an independent examination does not express an audit opinion that a true and fair view is given by the accounts. 


In contrast to an independent examination, an auditor is required to build up a body of evidence and express a formal opinion ‘true and fair view’ on the figures contained in the annual accounts. When an auditor is able to satisfactorily conclude that the financial statements are free from material misstatement they express an unmodified opinion. When the financial statements are not free from material misstatement or when they have been unable to obtain sufficient appropriate evidence the auditor has to issue a modified version of their opinion. There are three types of modification whose use depends upon the nature and severity of the matter under consideration. They are: the qualified opinion, the adverse opinion and the disclaimer of opinion.

Under the 2006 Regulations, if the term ‘audit’ is used in a charity’s governing document, or it prepares fully accrued accounts, it must have its accounts audited by a registered auditor.

The Institute of Chartered Accountants Scotland (ICAS) has a list of registered auditors in Scotland.

If a voluntary organisation is a charitable company then they must prepare their accounts in a way that satisfies the requirements of both accounting regimes – company and charity.

Whether they are required to have an audit or an independent examination is again dependent on income and what their governing document says.

The Office of the Scottish Charity Regulator (OSCR) has more information on whether your charity accounts need an audit or an independent examination.


A SORP is a Statement of Recommended Practice. It provides recommendations on how accounting standards should be applied in the context of particular sectors and how to account for sector specific transactions.

The Charities SORP applies to charities generally in the UK, unless a more specific SORP applies (such as for the Further and Higher Education sector or Registered Social Landlords).

SORP does not apply to charities preparing receipts and payments accounts, a choice available to those with annual income below £250,000.

The purpose of the SORP is to act as a guide to preparing and presenting a charity’s annual report and accounts, so that they conform with various legal requirements, and so that the accounts give a ‘true and fair view’ of the charity’s financial activities and financial position.  Additional advice has been issued by the Charities SORP Committee on the financial reporting implications that may arise from the measures being put in place to contain the impact of the COVID-19 virus.

The SORP tries to get away from the concept of profit as the measure of success or failure.

The profit concept is not appropriate to charities, as charity law requires they use their funds to further their charitable objects.

The profit and loss account (income and expenditure account) is therefore replaced by a Statement of Financial Activities (SoFA).

The SoFA brings together all the resources available to the charity and shows how these have been used to fulfil the charity’s objectives.

Last modified on 25 May 2022
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