How We Helped a Charity Correct understated Revenue by £15,000

Published: May 2024 Category: Charity Accounting

Introduction

Accurate financial reporting is critical for charities to maintain trust, comply with regulations, and make informed decisions. One of our clients had been understating their revenue by over £15,000 for more than 10 years. We stepped in to identify this discrepancy, correct the financial statements, and restate previous years' figures — helping them achieve full transparency and regulatory compliance.

                Key Takeaways
                Identified £15,000 revenue understatement spanning 10+ years
Prepared restated accounts for previous financial years
Ensured full compliance with Charity SORP and accounting regulations
Improved financial transparency and trustee confidence

            

The Problem: Hidden Revenue Impacting Charity Compliance

For over a decade, this charity reported lower revenues than they actually received. This understatement created challenges such as:

Inaccurate budgeting and planning: The charity was making decisions based on incorrect financial data
Potential non-compliance with Charity Commission reporting standards: Misstated figures could have led to regulatory issues
Misleading financial information for trustees and donors: Stakeholders weren't seeing the true financial picture

How We Identified the Issue

Through our thorough review and independent examination, we:

Analyzed bank statements and income records to trace all revenue sources
Reconciled discrepancies between reported and actual revenues
Collaborated closely with the charity's finance team to understand their accounting processes
Reviewed historical records to determine when and how the understatement began

Our Solution: Restating Previous Financial Years

Correcting historic financial data is essential for transparency. We:

Prepared restated accounts for the previous years reflecting true revenue
Ensured all adjustments complied with the Charity SORP and accounting regulations
Provided detailed reports explaining the changes to stakeholders and the Charity Commission
Implemented new financial controls to prevent similar issues in the future
Trained the charity's staff on proper revenue recognition procedures

The Outcome: Improved Trust and Compliance

Our intervention delivered measurable improvements across all key areas

Restored Trust

Regained confidence among trustees, donors, and regulatory bodies with transparent financial reporting

100% Trustee Approval

Better Planning

Enabled more accurate budgeting and financial forecasting with correct revenue figures

£15K Revenue Corrected

Full Compliance

Avoided potential penalties from the Charity Commission with properly restated accounts

10+ Years Corrected

Why Independent Examination Matters

This case highlights the value of regular independent examination by specialists familiar with charity accounting. Our expertise helps uncover hidden issues, ensuring your charity remains compliant and financially healthy.

Many charities face similar challenges with:

Complex funding streams that are difficult to track
Volunteer finance teams who may lack accounting expertise
Changing regulatory requirements under Charity SORP
Legacy accounting systems that may not capture all transactions

Our charity accounting services provide peace of mind through:

Thorough financial reviews: We examine all aspects of your financial records
SORP compliance checks: Ensuring your reporting meets current standards
Trustee-friendly reporting: Clear explanations of financial matters
Practical recommendations: Actionable advice to improve your financial processes

Could Your Charity Have Similar Issues?

Many charities unknowingly have financial reporting inaccuracies. Common warning signs include:

Bank balances that don't match your accounting records
Difficulty reconciling income with funding agreements
Trustees questioning financial reports
Unclassified or "miscellaneous" income categories

If you suspect your charity might have reporting issues, we offer a free initial financial health check.

Need Help With Your Charity's Financial Reporting?

Our team of charity accounting specialists can review your financial processes, identify any discrepancies, and ensure full compliance with Charity Commission requirements.

Call 020 4548 5884

Email Our Charity Team