How to Select a Charity Accounting Firm

Choosing the right accounting firm is one of UK charity trustees’ most important decisions. More than a matter of financial administration, it directly supports your board’s ability to uphold legal duties, safeguard charitable resources and maintain public trust through transparent reporting.

A poor choice can lead to compliance risks, inaccurate reporting, or underused funding opportunities. Yet many trustees begin this process without clear selection criteria, relying on price or personal referrals rather than sector-specific expertise.

Charity accounting is fundamentally different from business accounting. It requires a deep understanding of fund structures, the Statement of Recommended Practice (SORP) and the practical realities of managing restricted income and donor reporting.

Today we’re discussing the standards that matter: what to expect from a charity accounting firm, what to question during due diligence and how to assess whether a provider genuinely understands your regulatory environment.

Because if your financial systems don’t hold up, neither will your accountability.

What Trustees Should Expect from a Charity Accounting Firm

Charity finance follows a distinct regulatory and operational framework, so specialist knowledge matters. Here’s what a good charity accounting firm should offer:

Fund Accounting Expertise

Fund accounting is at the heart of charity finance. Unlike commercial businesses, charities must separate and report on different types of income, such as restricted funds, designated reserves and unrestricted income with a high level of accuracy.

A specialist firm will ensure these categories are clearly separated, consistently tracked, and compliant with SORP. This clarity supports both internal decision-making and external reporting.

Look for a firm that:

• Maintains accurate, real-time records for all fund types
• Produces clear reports showing fund movements over time, by donor or project
• Helps trustees understand the implications of reserves policies and funding restrictions

Familiarity With SORP and Charity Law

The Charities SORP outlines how accounts must be prepared for registered charities in the UK, particularly those using the accrual basis. A firm that works with SORP regularly will offer guidance that aligns with Charity Commission expectations.

Seek out providers who:

• Prepare compliant Statements of Financial Activities (SoFA) and Balance Sheet reports
• Advise on Trustees’ Annual Reports, including narrative content and risk disclosures
• Align financial reporting with your legal duties as outlined in the Charities Act and Commission guidance

Systems Capability

Accounting software is only as useful as the way it’s implemented. Platforms like QuickBooks, Xero, Liberty Accounts, and Sage can support excellent fund-based reporting, but only when configured to suit the unique structure of your charity.

Your accounting firm should tailor systems to match your income streams, project-level reporting, and internal controls. They should also help your team make the most of automation, integration, and real-time reporting.

Look for a firm that:

• Sets up accurate fund tracking across grants, donations, and trading income
• Enables real-time cash flow monitoring by programme, fund, or activity
• Integrates accounting systems with your CRM, donor database and payroll tools

Bonus: Firms that automate Gift Aid claims, bank feeds and routine entries will save you time and reduce the risk of human error.

Trustee-Focused Support

Effective financial oversight sits at the heart of strong governance. As a trustee, you need access to information that not only meets reporting obligations but also supports strategic decisions with clarity and precision.

Firms that contribute to monthly or quarterly reviews, offer commentary on variances and support planning discussions bring measurable value to your board.

This level of involvement reflects a clear understanding of trustee responsibilities under UK charity law and aligns closely with the Charity Commission’s emphasis on active governance.

And when your accounting provider shares your commitment to transparency and good governance, financial information becomes a tool for progress, not just compliance.

Red Flags – What to Avoid

Even if a firm claims to work with charities, certain patterns suggest their understanding may be surface level. Recognising these signs early can save your board from delays, inaccurate reports or advice that doesn’t hold up under scrutiny.

Templates Instead of Tailored Advice

Some providers use a one-size-fits-all approach: standard financial statements with little attention to how your income is structured or how your funds must be tracked. If their reports make no distinction between general income and restricted grants or don’t flag balances by project – you’re working with a system that wasn’t built for charities.

Narrow Scope of Service

A firm that offers year-end accounts but doesn’t help with budgeting, forecasting, or monthly financial monitoring is giving you part of the picture. That’s a problem if you rely on grant funding, report to institutional funders or need regular cash flow updates.

If they don’t offer management accounts, or they treat charity bookkeeping as a bolt-on service, the relationship will lack depth.

Lack of Sector Insight

Trust builds when your accountant understands why you’re asking for financial data in a particular format or why your board prioritises certain reports. If their responses suggest guesswork, or they’re unaware of common sector challenges, (like delayed grant payments or funder restrictions) it’s worth exploring other options.

You shouldn’t need to explain the basics. Your provider should already be there.

Evaluating Experience and Sector Knowledge

When selecting a charity accounting firm, sector experience should be one of your first considerations. Strong technical skills matter, but so does a working knowledge of the regulatory, operational and reporting environment that trustees navigate daily.

Focus on Relevant Client Experience

Ask how many registered charities the firm currently supports. Find out what types of organisations they work with, such as charitable incorporated organisations (CIOs), trusts or charitable companies and whether these reflect your size and complexity.

If your income includes grant funding, service contracts, or trading activity, it’s important to choose a firm that has successfully supported charities with similar models. This ensures they understand how to manage varied income sources, project-based reporting and the governance structures that support them.

Look for Long-Term Relationships

Firms that serve the sector well tend to build lasting partnerships. Ask how long they’ve worked with their current charity clients and in what capacity. A provider who supports clients through audits, board transitions and multi-year strategies demonstrates the consistency and insight that trustees value.

Assess Their Questions

Experienced charity accountants approach new clients with focused, relevant questions. They’ll ask about your fund structure, reporting cycles, trustee responsibilities and upcoming decisions. This type of engagement reflects a deeper understanding of how charity finance supports both compliance and strategic planning.

You should leave those early conversations feeling understood, not just assessed. The right provider helps you move from transactional support to informed, proactive decision-making.