From Receipts and Payments to Accruals

FionaMessenger

It is necessary for a Charity I do the accounts for to move from R&P to Accruals Accounting.

2024 to December 2024 was reported as R&P
2025 to December 2025 must be reported as Accruals

This might be a daft question, but I want to make sure they do things legally - am I basically drawing a line under the fact that there are no prepayments or accruals from the previous year to take into account, and I basically start recording prepayments in 2025 to carry over to 2026, and report 2026 accruals in the 2025 return, not taking into account any previous years at all?

davealucas

Assuming you are also preparing comparative financial information (reporting the last years accounts to compare against this years), you will need to do a restatement of the 2024 accounts to turn them into accrual accounts.

Do you have access to the Charities SORP? It may help you. You can find it on https://www.charitysorp.org/documents/d/guest/charities-sorp-2026-1

FionaMessenger

This then begs the question - what about the year before that? If I restate 2024 with prepayments and accruals this affects 2023 which would affect 2022 and so on and so forth.

They have to change to full accruals for 2025 because their revenue is exceeding 250K, but didn't in 2024. Sorry if I am misunderstanding, but it seems to me I would have to restate right back to year dot if I restate 2024, surely I should draw a line somewhere?

FionaMessenger

Ah wait a minute, I think you are saying that I would only need to do this with 2024 so as to compare the two years, but would they need to resubmit 2024 or convert 2024 to the full SFP? If the latter, the declaration made would differ a little from the comparison? I am thinking then a statment by the trustees explaining this would suffice within the return for 2025?

davealucas

@FionaMessenger Yes you would only convert 2024 to do the comparator between the years. There is no need to resubmit the 2024 accounts, you just need to provide a statement on the 2025 accounts that the 2024 accounts have been restated.