Annual reports

One good reason for producing reports is that accounts on their own do not tell you much about the activity of the organisation. The fact that they spent £60,000 on salaries is interesting, but what did the staff actually do all day? Another good reason to produce an annual report is that there are certain rules which say you have to.

What are the rules and choices?

Company Law

If your organisation is a company then with your accounts you must include a Directors' Report. You can clarify the content with your accountants.

Charity Law

Charity accounts need to be set out in accordance with the Statement Of Recommended Practice. The title for this document, available from the charity commission, is Accounting and Reporting by Charities and there is a good reason for the use of this title.

The SORP sets out the required content of the annual report. Among the usual things like the administrative information and the activities during the period, it also includes a requirement for the Trustees to explain their reserves. For larger charities, they also have to explain the major risks the charity faces and what they are doing about them.

Again, this is something you should discuss with your auditor or independent examiner, not least because they are supposed to consider the report as part of their work.

For groups that are charitable companies, just be aware that Companies House expect to see a Directors' Report and the Charity Commission expect to see a Trustees Report. They are, of course, pretty much the same.

Funding Requirements

Some funders may provide guidance or even requirements for your annual report. For groups that are neither charities nor companies, this can provide a good structure for the report. In Nottinghamshire for example, the County Council has published a guide which sets out the minimum requirements for annual reports for the groups they fund.

Your own Governing Document

It is possible, though rare, that your own rules specify some of the requirements of your annual report.

Your choices

If your report is an important tool in your attempts to raise funds, the usual choice is around how much to spend on the report. Occasionally, we see some annual reports that are what you might call "glossy". Some people may think what a slick professional group this is, lets give them a grant; others may think, what a waste of money, they could have used that to help the kids in the photos.

At the other extreme, a groups report may be one side of A4 text that has been photocopied. Some might say, what a bunch of amateurs, they can't be very good; while others may say here's a group that needs our grant.

If your report is important as a way of reporting to your members or users of your services, then the focus will probably be on the activities undertaken in the period. The style of the report will hopefully reflect the culture within the organisation.

If your annual report is mainly an administrative tool to ensure compliance with your statutory and other obligations, then spending lots of money on a "glossy" report may not be worthwhile.

A rough guide

Here is a basic list of the contents for a charity. Its not a complete list and you should check the rules, but even if your organisation is not a charity, this is not a bad place to start.

Legal and Administrative Information:

  • The name of the charity and any shorter or common name
  • The nature of the governing document
  • The names of all charity trustees at the report date
  • The names of people serving as trustees during the period
  • The method of appointment or election of trustees
  • The name of any other person or body entitled to appoint trustees
  • The address of the principle office
  • The names and addresses of other relevant bodies such as bankers, solicitors, accountants etc.

(if a charity does not wish to disclose any names for valid reasons it can seek permission from the charity commission)

Narrative Information:

  • An explanation of the objects of the charity
  • A description of the organisational structure
  • A statement on the relationship of the charity to any related parties
  • A review of the activities of the charity in the period and how it benefits the public
  • A statement of the charity policies on reserves, investments and grant giving
  • An explanation of any funds in deficit
  • A statement on risks faced by the charity