The essentials: Accounting - Reporting online

The small number of charities publishing their accounts online suggests not all are confident about how to do it. Stuart Anderson provides a step-by-step guide.

The number of charities publishing their accounts online is woefully inadequate, according to David Membrey, deputy chief executive of the Charity Finance Directors' Group. Although more charities are starting to experiment, a number of the UK's highest-profile non-profits still fail even to provide a downloadable PDF file. Fewer still, he says, produce "the ideal - an interactive, html version".

Done properly, online reports can be an important selling tool for voluntary organisations, according to Richard Pierce, director at consultancy PS Financials. This, together with the sector's push for transparency, has led the Charities Aid Foundation to launch an awards scheme to reward excellence in online accounting. But how can voluntary organisations be sure that they do a good job? Our step-by-step guide tells you how.

1. Know your audience - Understanding who you want to communicate with will help you structure information, decide what format to use and which elements to emphasise. If your income comes primarily from grant-making bodies, for example, you may want to present accounts differently than if your funding comes from government or public donations.

"As an accountant, I would prefer to see this information in a standard accounting format," says Trevor James, a member of the Institute of Chartered Accountants' voluntary sector committee. "But if you want to communicate with the public at large, it might be necessary to use a format they understand - pie charts, for instance."

2. Get the technology right - Children and young persons' mental health charity YoungMinds came top of the category for charities with an income between £500,000 and £2m in the 2004 CAF Online Accounts awards. Richard Hanks, its systems manager, believes the best format is "well-produced html".

Hanks says: "It can be accessed by anyone with an internet connection, and you can design it so they can change the type size and even the font.

We offer a print option in an easy-to-read black-on-white format, and we also create a PDF for download, both of the full report and of the summary."

Membrey underlines the importance of good design and accessibility. "You need someone who understands web design," he says. "It's not just a reproduction of the printed page. It should take advantage of the strengths of the format - for instance, ease of navigation and the ability to link straight to the relevant notes from each section of the report.

"But you don't want someone who will go mad with Flash and other stuff that is hard to download - I think bigger charities can get carried away and forget about those users who don't have access to the best technology."

3. What to include - Some charities, such as Weston Spirit, winner of the top income category in last year's CAF awards, chose to reproduce their entire reports and accounts as submitted to Companies House. Others, such as Young Minds, prefer to summarise when publishing online.

Whichever route you take, the online version must comply with the Charity Commission's Sorp and Sofa accounting standards, which limit your room to manoeuvre. James says charities must be careful to ensure that accounts reproduced online are accurate, and that "controls are in place to make sure unauthorised changes cannot be made".

He would like to see any summarised accounts give a clear indication of where income originates and how much is spent each year on charitable activities, compared with fundraising and administrative expenses.

According to Pierce, management information and a limited ability to "drill down" and analyse figures can make the report come alive. "Show what your expenditure means," he says. "Don't just say you spent £100,000 helping fallen women in Whitechapel - explain what that means in terms of the number of women helped and what you did for them."

4. Publicise it - The exercise is pointless if you hide your accounts away.

Within the first month of publication, a link from the homepage might be appropriate. Thereafter, the report should be available from the site's 'about us' page.

Membrey believes the previous two or three years' accounts should also be available here. "The nature of charity projects and funding mean a single year's accounts might not give an accurate picture of your operations," he says.

Links to the report from any of the projects mentioned might also be helpful, as would an email or letter to supporters informing them of the web address. Online publication offers a great way to communicate financial information to audiences that would never usually wade through the print version - but first they need to know it's there.

CASE STUDY - 2ND/1ST HURST SCOUT GROUP

You don't need to have a seven-figure turnover to publish your accounts online. The lowest income category in the CAF Online Accounts Awards is for charities with an annual income of less than £100,000 - the 2004 award was won by 2nd/1st Hurst Scout Group, which has an income of £10,000.

The group publishes its accounts in interactive html format using the free design software provided by its website's host, www.communitykit.co.uk.

The finished report is available at www.2nd1sthurst.ik.com and took about one week to produce - including preparation of the hard copy. "There were two of us working on this," says John Lyne, trustee of the scout group.

Lyne is an accountant by trade, but he does not see this as an excuse for others not to emulate his efforts.

"The Scoutbase website provides all the guidance you need to produce Sorp-compliant accounts," he explains. "I've proved that a small organisation can do this. The whole point of Sorp is to be open with your public - I think we have been as open as it is possible to be."

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