Annual accounts

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Charity law requires your PCC to produce a set of financial statements within a prescribed format as part of your Annual Report.

What format do I need to use?
Charity Commission guidance and Church regulations allow two formats for your accounts - which one you need to use depends on the amount of your parish's income and the complexity of your work:
  1. Accruals - for PCCs with a total annual income of £250,000 or more.
  2. Receipts & Payments - a simpler format for PCCs with an income of less than £250,000. If your PCC is below this threshold, you may also choose the Accruals format if you prefer it.
Whichever method you use, you need to follow a fund accounting model (see below). You can download sample accounts in both formats from this page.
Receipts & Payments Accounting:

Accounts in a Receipts & Payments (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 focus on cash movements in and out of the PCC’s bank accounts during the financial year (1st January to 31st December). 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.

You may prefer to use the more detailed Accrual Accounting method (see below), although this is not required until your PCC's gross income exceeeds £250,000.

The Parish Resouces website incudes detailed guidance on producing Receipts and Payments Accounts.

Accrual Accounting:

Accrual is a more complex method - if you are a new treasurer with no previous accounting background, and your parish income is less than £250,000, you might prefer the simpler Receipts and Payments accounts method.

The Charity Commission suggest three occasions as examples of where accrual accounts would be appropriate:

  1. If your church is growing in complexity - for example, if you have a trading arm or work together with other charities.
  2. If donors to your church may make accruals accounts a condition of their grant.
  3. If your PCC feel they need to explain more about their finances than Receipts and Payments accounts allow - for example:
  • Your church has significant non-cash assets or material assets, which your PCC want to value and depreciate in the accounts.
  • Your church has major non-cash donations (e.g. gifts in kind or services).
  • Your church has a ‘total return policy’ in relation to endowment investments.
You do not usually need to generate a separate accrual account for each fund - you may summarize transactions for each fund together in columns and provide a separate list of funds with their current values.

You can find current guidance on Accrual Accounting for parishes in The Charities Act 2011 and the PCC 4th edition: A guide to the SORP 2015 Regulations, which you can buy from any good bookshop for £10.99, or click here to read it online.
Fund accounting
This is about the accountability of your PCC and how you handle donations to your parish. A fund is a pot of money with a specific purpose - it is not the same as a bank account.  A bank account may hold one or more funds - your accounts need to show how each fund is allocated and spent. There are two types of fund:
  1. Unrestricted and Designated funds contain money donated for the general running of the church;
  2. Restricted and Endowment funds contain money donated for a specific purpose defined by the donor. Your PCC cannot use Restricted funds for any purpose other than that specified by the donor.
Return of Parish Finance
Whichever accounting format your PCC needs to use, each parish is different so there will be considerable variation in the way different parishes record and detail their finances. So the Church of England asks each parish to complete an Annual Return of Parish Finance which allows each diocese to gather financial data in a common format.

Your PCC needs to supply this Return of Parish Finance with the Annual Report and Accounts at the Archdeacon's Visitation each year.  It is a 'national church' document which our diocese uses as the main basis of the Finance Dashboards we supply annually to each church.

Click here to download guidance on completing the Return of Parish Finance.
You may find it helpful to use one of these Excel spreadsheet templates for the accounting method appropriate to your PCC: 
Accounting software.
Many parishes make use of accounting software from Data Developments, designed specifically for churches and suitable for preparing both accounting formats.
Useful resources
You may find the following links helpful:
How can we help?
Our Resources Team at St James' House 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. Contact us on 0151 705 2180 or email