Annual Accounts

Making It Easier > Processes > Finances > Annual Accounts

Each PCC is required, by law, to generate a set of financial statements within a prescribed format.

The annual accounts form one strand of the threefold Annual Report required under Charity Law. Church rules and Charity Commission guidance provide for two specific formats for the accounts, Receipts & Payments and Accruals. PCCs with total annual income of £250,000 or more are required to produce their accounts in an Accruals format. PCCs with income below this threshold may choose to use either the simpler Receipts & Payments format or the Accruals format. In both formats a fund accounting model must be followed (see below). Sample accounts in both formats are in the downloads box on this page.

Receipts & Payments (R&P)
Accounts generated in an R&P format are simpler to prepare and offer a snapshot of the state of church finances at the end of the financial year. R&P accounts include any and all transactions that occur within the specific inclusive date range, 1 January to 31 December (the PCC's financial year). It doesn't matter to what or to when the receipt or payment relates to, only the date of the transaction itself is of relevance. It is normal to prepare a separate R&P account for each individual fund and to pull the strands together in a Statement of Assets and Liabilities.

Accrual accounts are more complex but many treasurers with experience of using this format prefer to retain it for the church finances. In accruals the date of the transaction is not directly relevant, rather it is the financial year that the transaction relates or belongs to that matters. A separate accrual account is not normally generated for each fund, rather transactions for each fund type are summarized together in a columnar format and a separate list of funds with their current values is also provided.

Templates, software and guidance
Templates for the preparation of accounts in both accruals and R&P format can be downloaded from this page. Many parishes make use of accounting software from Data Developments, designed specifically for churches and suitable for preparing both accounting formats. The Resources Team offer training for new and established treasurers in the spring and autumn of each year and are available to offer hands on assistance all year round.
Return of Parish Finance (The Blue Form)
Although annual accounts are prepared according to a given format in reality there is considerable variation in the way things are recorded and the level of detail provided. Therefore the Church of England asks each parish to complete an Annual Return of Parish Finance which allows London and each diocese to gather financial data in a common format. This Return of Parish Finance (the Blue Form; it used to be on blue paper!) must be supplied with the annual report and accounts at the Visitation each year.  It is a 'national church' document which is used in Liverpool as the main basis of the Finance Dashboards supplied annually to each church. Guidance on completnig the "blue" Return of Parish Finance can be found in the Downloads and Links box.
Fund Accounting
Fund accounting is all about the accountability of the PCC and how it has handled donations given to its church.  A fund is a pot of money that has a specific purpose and should not be confused with a bank account.  A bank account is simply the receptical used to hold one or more funds.

Unrestricted and Designated funds will contain money donated for the general purposes of the church, while Restricted and Endowment funds will contain money donated for a specific purpose; the specific purpose will have been defined by the donor.  A PCC cannot restrict its money, nor use Restricted funds for any purpose than that specified by the donor.