Coronavirus: Financial Reporting for Charities in an uncertain world

It is difficult to predict what the outbreak of COVID-19 will ultimately have on the UK economy and the organisations which operate within it.  This article considers the potential impact on charities annual reports and financial statements.

Every day brings additional measures by the government to limit the spread of the Coronavirus outbreak. And there is yet more to come with the need to be flexible in an ever-changing and uncertain world.

And so it is with charities.  The measures already in place involve a high degree of social disruption which has had an impact on the delivery of and demand for the activities of charities, the availability of staff for charitable work, and levels of illness across society which will affect beneficiaries of charities.

Trustees should by now have considered the impact on their charity and if necessary taken steps to mitigate their financial exposure, taking advantage of the various measures introduced by the government, including grants and business rates relief for charity shops, and financial support which allows charities to “furlough” employees for three weeks or more.

How these measures impact individual charities will depend on a number of factors including the charity’s key sources of income, areas of charitable activity, staffing models, contractual relationships, the nature of the charity’s assets and liabilities and the charity’s underlying funds’ structure.

Trustees will already be facing unexpected challenges and it will be important that these are reflected in the necessary decisions that have to be made when reporting on the charity’s activities and financial position.

Trustees’ Annual Report including risk reporting

Trustees will need to consider the impact on the financial statements as a result of the changing activities of the charity itself.  These could relate to:

  • Fundraising
  • The changing circumstances of staff and volunteers
  • Changes of demand for charitable services, the effect of failing supply chains and the value of the charities’ assets and liabilities, including assets, pension assets and liabilities and investments
  • The effect on charities’ reserves.

Trustees will also be aware of the importance of providing users of accounts with information about the material decisions they have made and the impact of these on judgements and uncertainties.

When preparing their Trustees’ Annual Report, the Trustees may need to consider:

  • Explaining how the virus control measures affected the charity’s activities in reporting main achievements
  • Explaining financial uncertainties regarding the charity’s ability to continue to operate and the steps taken to address those uncertainties
  • Explaining how volunteers and employees assisted in managing changed circumstances
  • Explaining how the Trustees managed the change in situation on fundraising activities
  • Explaining the effect on staff, volunteers and beneficiaries and the implications on the charity’s operations and activities for the coming year
  • Explaining the impact on the charity’s reserves policy, level of resources and any change to designated funds set aside for future commitments
  • Explaining the likely impact on continuing virus-related control measures on the future aims and activities of the charity, and how this affects the charity’s operations.

Areas of focus on the Financial Statements

Trustees will need to carefully consider the impact of coronavirus on the charity’s financial statements to ensure that these continue to reflect the financial activities and position of the charity in accordance with the Charities SORP.

  • True and fair – the Trustees, when preparing and/or approving the financial statements are responsible for ensuring that they present a true and fair view of the affairs of the charity, based on their assessment that the reported income, expenditure, assets, liabilities and funds are fairly presented and described at the reporting date
  • Post balance sheet events – the Trustees must ensure that changes are made for adjusting events taking place after the reporting date, including the value of assets which may have become impaired as a result of the impact of the virus
  • Going concern – the Trustees have assessed all available information about the future at the date they approve the financial statements, such as the availability of credit facilities and other form of financial assistance, and that the forecasts and budgets fully consider the effect of the virus on its operations.

Disruption to Administration and Governance

During this period of uncertainty and because of the control measures introduced by Government, it will be impossible for charities to hold AGMs and to finalise their accounts and annual report. 

For those charities that have a filing deadline approaching and are unable to finalise their accounts or file their annual return, the Trustees should advise the Charity Commission by contacting for those charities registered in England and Wales, or by completing the online contact form at for those registered in Scotland.

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