This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members to understand when a charity requires a Statement of Cash Flows (often referred to as a cash flow or a cash flow statement).

Members may also wish to refer to the following related helpsheets:

• Charities – financial reporting and scrutiny (England and Wales)
• Charities - financial reporting and scrutiny (Northern Ireland)
• Charities - financial reporting and scrutiny (Scotland)

Both company and non-company charities preparing accruals accounts have to comply with The Charities SORP (FRS 102) and practically are excluded from applying FRS 102 Section 1A. 

Update Bulletin One amended the SORP (FRS 102) to require larger charities to provide a statement of cash flows. It defines a larger charity as one with gross income exceeding £500,000 and so any charity breaching this threshold will require a statement of cash flows.

A smaller charity is not specifically required to prepare a statement of cash flows, however may still opt to do so.

It should be noted that the threshold for a larger charity is different from the relevant audit thresholds. Please refer to the Charities – financial reporting and scrutiny (England and Wales), Charities - financial reporting and scrutiny (Northern Ireland) and Charities - financial reporting and scrutiny (Scotland) helpsheets for further discussion on audit requirements for charities.

Where the charity is a parent entity and produces consolidated accounts, it is likely to be a qualifying entity as defined in the glossary of FRS 102. Where this is the case, the parent charity may choose to take advantage of the reduced disclosure exemption in paragraph 1.12(b) of FRS 102, meaning it does not need to produce an individual cash flow statement.

This exemption would also be available where the charity is itself a subsidiary and still meets the definition of a qualifying entity.

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Technical Advisory Service on +44 (0)1908 248 250 or via webchat.