Preparing the Trustees’ Annual Report

In this month's charity blog, Charities Manager, Rory McCall, looks at preparing the Trustees' Annual Report.

One of the most important tasks to be carried out when preparing the financial statements each year is the preparation of the Trustees’ Annual Report (TAR). The TAR is the narrative part of a set of financial statements which provides lots of information including detail about the charity’s activities, how it’s run, what its objectives are and its achievements during the year. Despite the importance of the content, it’s something which many charities leave until late on in the financial reporting timetable and this can reduce the quality of the content.

The ultimate responsibility for the production of the TAR lies with the charity’s trustees. The trustees require to agree upon and approve, sign and date the TAR when approving the financial statements, and are also best placed to understand and document the charity’s activities and achievements during the year through their governance of the charity. However, the senior management of the charity can also help with the preparation and your auditor or independent examiner can provide feedback and advice on contents or any areas which could be expanded upon to improve the quality of the report.

It's important that preparation of the report isn’t left until the last possible minute, or when the person preparing the accounts asks for it. Whilst much of the TAR is reflective, touching on activity during the year, the best reports are often the ones prepared and updated on an ongoing basis throughout the year. You may need to wait for year-end results to complete the financial review section. However, information on activities and key achievements can be drafted throughout the year when the detail is at its most familiar.

There are legal requirements in terms of the content of the report. Whilst it’s therefore important that these statutory requirements and key headings are included, it’s important not to get bogged down in the detail and to be creative with the contents. Other than the legal requirements, there are no restrictions as to what the TAR should include and trustees should aim to use this as an advert for the charity, drawing on its selling points, key achievements and how the activities improve the lives of its beneficiaries.

Lastly, you should always leave time for review of the TAR to ensure the quality and consistency of the report. If left until the last minute, the quality of the report can often suffer as key details on activities throughout the year can often be overlooked. Preparing the TAR as the year progresses leaves plenty of time for review and reflection, meaning the financial statements are a high-quality document which sells the charity to its readers.

This blog is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not be used as a substitute for taking professional advice in any specific situation. Wylie & Bisset LLP (and its subsidiary Wylie & Bisset (Audit) Limited) will accept no responsibility for any actions taken or not taken on the basis of this blog. If you would like further advice or would like to discuss any of the issues raised in the blog then please get in touch with your regular Wylie & Bisset contact or use the contact form on our website.

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