How Often Should a Charity Review Its Finances with an Accountant?

Introduction

Good financial management is essential for every charity, regardless of size. Trustees have a legal duty to ensure that the charity’s funds are used properly and that it remains financially stable. One of the best ways to meet these responsibilities is through regular financial reviews with an accountant.

But how often should these reviews take place? The answer depends on your charity’s size, complexity, and funding model. This article explains how frequently a charity should meet with its accountant, what should be discussed, and why these reviews are so important for long-term sustainability.

Why Regular Financial Reviews Matter

Charities operate in an environment where funding can fluctuate, costs can rise unexpectedly, and compliance requirements are strict. Regular financial reviews with an accountant help to:

• Monitor cash flow and spending

• Identify financial risks early

• Ensure compliance with the Charity Commission and HMRC

• Provide accurate reporting for trustees and funders

• Support long-term planning and decision-making

Without consistent oversight, even well-intentioned charities can experience cash shortages, missed deadlines, or governance issues.

Recommended Review Frequency

The ideal review schedule depends on your charity’s activities and income level, but the following general guidelines apply:

1. Monthly Reviews (for medium and large charities)

Charities with multiple income streams, employees, or active projects should meet their accountant monthly. These meetings ensure up-to-date financial management and allow for quick action if something goes wrong. A monthly review should include:

• Reviewing bank reconciliations and cash flow

• Comparing spending against budgets

• Tracking restricted and unrestricted funds

• Checking payroll, VAT, or Gift Aid records

• Discussing upcoming grant deadlines or compliance requirements

Monthly reviews are particularly valuable for charities managing contracts or government funding, as they often have strict reporting conditions.

2. Quarterly Reviews (for smaller charities)

Smaller charities with simpler finances can usually review their accounts quarterly. This allows trustees to stay informed without overwhelming administrative work. Quarterly meetings should cover:

• Income and expenditure updates

• Budget comparisons

• Fundraising performance

• Reserve levels and future cash flow

• Any changes in compliance or regulation

Quarterly reviews also allow time to prepare for annual returns and independent examinations.

3. Annual Review (for all charities)

Every charity, regardless of size, must hold an annual review with its accountant. This review ensures compliance with legal reporting obligations and provides an opportunity to reflect on the charity’s overall financial health.

The annual review should include:

• Preparation of annual accounts and the trustee report

• Discussion of independent examination or audit findings

• Review of governance, reserves, and risk management policies

• Forward planning for the next financial year

For smaller charities, the annual review may be the only formal meeting with an accountant, but even these should be thorough and forward-looking.

Events That Require Extra Financial Reviews

In addition to scheduled meetings, charities should arrange extra reviews with their accountant whenever major financial or strategic changes occur, such as:

• Applying for or receiving large grants

• Starting new projects or trading activities

• Employing staff or introducing payroll

• Purchasing or leasing property

• Merging with or absorbing another charity

• Facing cash flow problems or unexpected expenses

These situations often have complex financial implications, and early advice from an accountant can prevent costly mistakes.

What to Discuss During a Financial Review

A good financial review should go beyond simply checking the accounts. It should provide a full picture of how the charity is performing and whether it is meeting its goals. Key discussion points might include:

• Current financial position and liquidity

• Trends in income and expenditure

• Fundraising effectiveness and donor retention

• Management of restricted funds

• Compliance with reporting deadlines and regulations

• Opportunities for tax relief or Gift Aid optimisation

• Future budgeting and funding strategies

An accountant can also highlight patterns in spending, suggest efficiency improvements, and provide an independent perspective that trustees may overlook.

Benefits of Regular Reviews with an Accountant

1. Improved financial control Regular meetings help trustees stay aware of financial performance and detect irregularities early.

2. Better decision-making Up-to-date financial data supports more accurate planning and risk management.

3. Compliance assurance Regular contact ensures the charity stays compliant with HMRC, Companies House, and the Charity Commission.

4. Enhanced transparency Frequent reviews demonstrate accountability to donors, funders, and beneficiaries.

5. Confidence in growth With regular insight from an accountant, trustees can make informed decisions about expansion, investment, or restructuring.

Example Scenario

Imagine a charity called Green Futures UK, which manages several environmental projects and employs five staff. Its accountant meets with the finance officer every month to review cash flow, payroll, and grant spending. Each quarter, the accountant also attends trustee meetings to present a financial summary.

When Green Futures UK receives a new £200,000 grant, an additional review is scheduled to discuss how to manage reporting requirements and allocate the funds properly. This proactive approach prevents overspending, ensures compliance with funder conditions, and keeps the trustees confident about their decisions.

By contrast, a small local animal rescue charity with one staff member and simple income sources might meet its accountant quarterly to review income, donations, and expenses. Both examples show how frequency should match the scale of operations.

The Role of Trustees in Financial Reviews

Trustees are legally responsible for overseeing a charity’s finances, even if they rely on accountants or finance officers for technical work. Regular reviews allow trustees to:

• Ask informed questions about the charity’s financial health

• Ensure resources are used effectively and ethically

• Identify risks such as overspending or falling income

• Make strategic decisions based on accurate data

Trustees should receive financial updates at every board meeting and should be able to interpret key figures such as reserves, cash flow, and income trends.

Common Mistakes to Avoid

• Waiting until year-end to review finances

• Ignoring minor discrepancies in income or expenditure

• Failing to separate restricted and unrestricted funds

• Not involving trustees in financial discussions

• Relying solely on one person for financial oversight

A strong financial culture comes from collaboration between trustees, management, and the accountant throughout the year.

How an Accountant Adds Value

An accountant experienced in charity finance does more than prepare accounts. They can:

• Interpret financial data and explain trends

• Recommend improvements in financial controls

• Help prepare budgets and cash flow forecasts

• Ensure accounting systems meet SORP requirements

• Advise on tax reliefs, Gift Aid, and VAT for charities

Having regular access to this expertise helps the charity stay compliant, efficient, and financially secure.

Conclusion

How often a charity should review its finances with an accountant depends on its size and complexity. Larger or fast-growing charities benefit from monthly reviews, while smaller ones may find quarterly meetings sufficient. All charities, however, must conduct at least one thorough annual review.

Regular financial reviews are not just about compliance — they are about building trust, improving decision-making, and ensuring the charity’s long-term sustainability. Working closely with an accountant gives trustees the clarity and confidence they need to manage resources responsibly and continue making a positive impact.