ABSTRACT
What is the bottom line when there is no bottom line? One of the biggest problems with charity accounting is that from a reporting point of view it needs to be significantly different from commercial accounts reporting and given the accounting regime in the United Kingdom this has not been possible. Considerable changes have taken place over the past ten to fifteen years in an attempt to distinguish more clearly between a set of accounts produced for a commercial organization and that produced for a charity. We have seen the development from receipts and payments to income and expenditure to the Statement of Financial Activities (SOFA) and in this chapter we will look at this in some detail. We will also make the point that when it comes to other accounting statements, such as the balance sheet and cashflows, there are few if any differences between the way in which a commercial organization reports and charities report, although the gap is widening. However, first we will take a look at the thorny question of who charity accounts are actually prepared for.
