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Accountability

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

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

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</u>

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Arts and Business

Arts and Business exists to promote and encourage partnerships between the private sector and the arts, to their mutual benefit and to that of the community at large. Its priority is to provide a service for its members but a number of its services are of value to arts organisations as well.

Among its activities are: annual award ceremonies; New Partners (a government-funded incentive for businesses to support the arts); and Arts and Business, aiming to improve the quality of management in the arts through business involvement in schemes such as the Skills Bank (for business people to volunteer to support specific projects) and training courses.

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Audit, auditor

An audit is an examination of something, a reckoning, a writing down of what you've got. A social audit is when you examine what non-money resources you receive and use. Audited accounts are audited when they've been examined in a certain defined way.

An auditor is not the person who 'does the books'. He or she is an independent person who examines the accounts and then states that they give a true and fair view of the organisation's finances or that the accounts are consistent with the financial records. Just to complicate things, however, the law distinguishes between accounts that have been professionally 'audited' (by an auditor) and those that have been 'independently examined' (by an independent examiner). Company law and charity law provide rules about how an audit must be conducted and what an auditor must do. An auditor needs to be professionally qualified (an accountant) but not all accountants are able to carry out all types of audit.

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Audited accounts

A statement of your organisation's finances, usually for your last full financial year, which has been drawn up by a qualified auditor.

If the auditor believes the figures to give a true and fair account of the organisations financial state, he or she declares them to be true. If he or she doesn't have enough information to go on or believes there's something false about the figures, he or she 'qualifies' the accounts.

Charity law requires charities with a certain level of income or expenditure (currently £10,000) to have their annual accounts professionally scrutinised. If the income or expenditure is over £250,000, the accounts must be audited by a registered auditor. (Below that, organisations can opt for an independent examination). Even if there is no legal requirement to do so, funders sometimes insist that accounts be audited. In these circumstances it may be worth checking out exactly what they mean - independently examined accounts may be acceptable.

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