One of the ways public trust and confidence in charity is maintained is by the fact that charities are transparent and accountable. All charities must, by law, maintain accounting records and prepare publicly accessible reports of their accounts.

However, the way in which each charity must maintain, prepare and report its accounts depends on its income and expenditure, gross assets and constitution.

This section explains three different accounting methods:

• Simple receipts and payments accounts
• Accruals accounts for small charities
• Accruals accounts for larger charities

You can also view our model example accounts for receipts and payments and accruals for non-company and company charities:

• Example Trustees' Annual Reports and Accounts

Charities need to prepare their accounts to comply with the Statement of Recommended Practice (SORP) Accounting and Reporting by Charities (SORP). The Charity Commission is working with a representative committee from the sector, to keep the SORP under review and update it where appropriate. This section also includes details of the committee and its proceedings.

• SORP, Charity Accounts and Reports: What you need to know

To prepare charity accounts properly trustees must keep sufficient accounting records to show and explain all the charity's transactions. This is a legal obligation under the Charities Act 2011. Where the charity is preparing accruals accounts, either because it has income over £250,000 for the year or for any other reason, it is the trustees' responsibility to prepare accounts which give a true and fair view.

• Retention of Accounting Records - explains which records should be kept and for how long (with the kind permission of Buzzacotts).

In addition to accounts, all registered charities must prepare a Trustees' Annual Report and those with a gross income which exceeds £25,000 must send this to us. Our guidance What information must trustees send us this year? explains the reporting requirements for charities in different income bands.

Charities may sometimes need to file Corporation tax or other tax returns. Our guidance Charities and Corporation tax returns explains when this might be necessary and links to useful external guidance.

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