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If you are accountable you have to give an account or answer for your actions to someone. This may be formal, like when a Management Committee reports to the AGM or Councillors stand for re-election. But there are many other things that help organisations be 'held to account' by all the different stakeholds involved. These include: when and where meetings are held, how accessible reports are, whether there is regular contact between senior staff or trustees and users of services.

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Accounts are a way of 'giving an account' of what has happened financially. They can cover any period. Most organisations have to produce annual accounts. These are usually drawn up after the end of the financial year and should give a full and clear picture of both the organisation's transactions during the preceding year and its financial position at the end of it. These accounts are often presented to an organisation's Annual General Meeting. Registered charities may have to send their annual report and accounts to the Charity Commission every year and registered companies have to make a similar annual return to Companies House.

There are two basic ways of doing accounts: accruals accounting which shows ncome and expenditure (or in the case of registered charities provides a Statement of Financial Activities (SOFA) over a period, or receipts and payments accounting. Accrual accounts should include a balance sheet and notes to the accounts, whereas receipts and payments accounts should include a statement of assets and liabilities. Accounts are often professionally audited (accounts) or independently examined. Bigger organisations often produce monthly or quarterly management accounts for use within the organisation. These are not independently examined.

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Accruals, accruals accounting

Accrual accounting is based on the concept that any money earned by an organisation must be matched with the costs that were incurred to generate that income, and that both are included in the same period of accounting. For example the costs of holding a jumble sale are balanced against the income it generated and both costs and income appear in the same set of accounts. This allows accounts prepared on an accruals basis to show a "true and fair" view of an organisation's financial activities.

Accounts prepared on a receipts and payments basis are less sophisticated and easier to prepare. They are also often easier to understand.

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ACF is the UK-wide support organisation for grant making trusts and foundations of all types.

ACF is at:
Central House
14 Upper Woburn Place
London WC1H 0AE
Telephone 020 7255 4499
Website www.acf.org.uk

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