What goes on a charity balance sheet?

England and Wales: This page sets out the position in full. Scotland: the same SORP requirement, with no difference in principle. Note the different asset-test figure and a different qualifying condition, covered below. Northern Ireland: the same SORP requirement, with no difference in principle. There is no asset-based audit trigger to interact with at all.

Can the balance sheet change whether an audit is needed?

Yes: in England and Wales and in Scotland, finishing the charity balance sheet can change the audit answer. Most guidance treats the external scrutiny determination as something trustees do once, early, and file away. But that determination depends on the balance sheet.

This page assumes the records are on the accruals basis and the Statement of Financial Activities is built. If not, first convert your records to the accruals basis and build your Statement of Financial Activities.

One limb of the audit test is measured against gross assets at the year end. Gross assets are not known for sure until this balance sheet is finished. Recognising a lease for the first time can move that figure enough to change the answer.

If your charity is in a lease-recognition year, treat the scrutiny determination as provisional until the balance sheet is done. Be ready to revisit it once the balance sheet is complete — not before. Northern Ireland has no asset-based audit trigger. So a charity reporting to the Charity Commission for Northern Ireland does not face this loop.

What the charity balance sheet contains

A charity balance sheet is the statement of the charity’s assets and liabilities at the year end, together with the analysis of funds. The analysis of funds shows how the net assets split between unrestricted, restricted and endowment funds (see restricted and designated funds). If a restricted balance is left because a grant could not be spent as planned, see what happens if we cannot spend a grant.

This fund split has to match the fund columns already used on the Statement of Financial Activities. The two documents describe the same charity from two angles. They are not two separate sets of figures.

Lease liabilities: a new line, not an addition to an existing one

The SORP requires a lessee to show outstanding lease liabilities as a separate item on the face of the balance sheet. This is a new caption that did not exist before SORP 2026. An old template that has not been updated has nowhere to put it. The matching right-of-use asset sits on the assets side.

Not every lease reaches the balance sheet at all. Build your lease register works through the short-term and low-value exemptions, including why no money figure attaches to the low-value one.

How does the audit asset test work?

In England and Wales the asset test has two limbs, and both have to be met in the same year. The table shows the asset figure and the condition it is paired with in each jurisdiction.

In England and Wales neither figure does anything on its own. A charity with a lot of property and modest income is not caught by this test on the assets figure alone. Some summary tables list the two figures side by side without saying how they combine. Whatever such a table suggests, the assets figure alone does not trigger an audit.

Scotland pairs its own asset figure with a different kind of condition entirely. The test applies only where the charity has prepared its accounts on the accruals basis. There is no separate income threshold. Usually the two conditions land on the same charities. Accruals accounting and this asset test tend to catch charities of a similar size. But not always.

Take a Scottish charity below the accruals-trigger income level. It prepares accruals accounts anyway, or has to as a company. If it holds gross assets above the Scottish figure, it is caught by the audit test. A charity in England and Wales with the same income and the same assets would not be.

Northern Ireland has no asset-based audit trigger of any kind. Recognising a lease there can still make a charity look larger on paper. But it cannot change the scrutiny answer the way it can in England, Wales or Scotland.

Do total funds have to agree with the Statement of Financial Activities?

Yes. The closing total funds figure is the same number on the balance sheet and on the Statement of Financial Activities. The two reach it from different directions. If they do not agree, the accounts do not add up.

That is one of the two most basic benchmark failures the Charity Commission tests for. It has been found even in accounts that had already been through examination or audit.

With the balance sheet agreed, the next step is to prepare the notes to the accounts.

Common mistake: not showing lease liabilities as a separate balance sheet line

Lease liabilities had no line of their own on the balance sheet before SORP 2026. An unrevised template has nowhere to put them. The SORP requires a lessee to show outstanding lease liabilities as a separate item. It is a new caption, and templates carried over from earlier years need updating to include it.

Common mistake: accounts that do not add up or are not internally consistent

Preparing accounts by hand, late adjustments, and a trustees’ report drafted apart from the accounts all make this easy to miss. The benchmark tests both that the accounts are consistent and that the primary statements add up. The Commission has found accounts that failed on this basic arithmetic even after review by a scrutineer.

Worked example

Saltmarsh Trust recognises a right-of-use asset for its head office lease for the first time this year. Gross assets rise by the value of that asset.

Gross assets are one limb of the audit test in both England and Wales and Scotland. So Saltmarsh’s trustees re-run the external scrutiny determination after this balance sheet is finished, not before. The earlier, provisional answer used a gross assets figure that lease recognition has since moved.