ACAT Newsletter January 2026

Now into the final week of January with 2026 stretching out ahead, do we feel a sense of “déjà vu” or is there a spark of anticipation, even dare I say it, excitement at what the next eleven months may bring?

Have we set out our aims for the year, both in terms of our responsibilities as church accountants, treasurers or financial administrators, not forgetting personal and family priorities?

The January Newsletter contains a few important issues to consider. A safeguarding inquiry by the Charity Commission provides gentle reminders for all church governing bodies. The increasing use and impact of Artificial Intelligence (AI) in church life and administration also provides food for thought.

If appropriate, are you prepared for the annual financial external scrutiny of the accounts? We offer some preparatory questions to reflect on.

A new year can also present new opportunities. What opportunities do you see this year for you and your church?

We hope you find this month’s newsletter as engaging and helpful as always.

Table of Contents:

What’s new
- New Charity Governance Code in force
- Charity reporting changes: SORP 2026 vs audit thresholds
- Government announces funding for places of worship – LPW Grant Scheme replacement?
- Regulator issues official warnings to two Church of England Dioceses
- Trusting AI: let’s be cautious here
- ACAT job vacancy – Membership helpline support
- Enjoying this month’s highlights?
Points to Ponder
- Financial year-end – Independent examination: How prepared are you?
- The Methodist Covenant Service – An annual commitment
- New Year priorities – Things to ponder
Helpline Q&A
- Terminology – part 1
- Terminology – part 2
- Terminology – part 3
- Posting your Annual Report and Accounts to the Charity Commission
Partners in Ministry
- Fundraising support for your church
- How is your church responding to climate change?
- Over £300k donated to churches in the last 12 months!
Spring Training Programme
Charities Engagement Team – Upcoming webinars
Final Thought

God bless,

Ashley Ellis
ACAT Executive Officer

P.S. To make sure you don’t miss important updates, please add @acat.uk.com to your safe senders list. Some members have found our emails ending up in spam folders. We’ve put together a simple guide for Outlook, Gmail and other email providers at: https://www.acat.uk.com/make-sure-you-get-acat-emails/

New Charity Governance Code in force

#Charity Governance & Regulation, #News, #Encouraged Action

In the lead up to Christmas, it may have escaped notice, so a gentle reminder that the new Charity Governance Code, published last November, is now in force. Although voluntary, it is still considered best practice.

The code is based on eight principles, all of which assume that a charity (and therefore a church) is acting in accordance with its governing document and charitable purpose.

Foundational Principle – Trustees take responsibility for, and invest the necessary time and care, in understanding the charity, their responsibilities and legal duties.

Organisational Purpose – The board is clear about the charity’s aims and how they benefit all or part of the public, and how these aims will be achieved.
Leadership – The charity has an effective board providing strategic leadership consistent with the charity’s purpose and values.
Ethics and Culture – The board has a set of agreed standards and values which influence the charity’s culture and behaviour. It is also open to feedback on how that is demonstrated in practice.
Decision Making – Decisions are made by the board which best serve the charity’s purpose.
Managing Resources & Risk – Resources are developed, allocated and managed using efficient stewardship together with effective risk assessment and management.
Equity, Diversity & Inclusion – The board has a clear, effective, agreed approach to equity, diversity and inclusion, which is evident within the charity.
Board Effectiveness – The charity’s board works collaboratively with a balance of appropriate skills, experience, background and knowledge. Its effectiveness is reviewed regularly with a view to identifying areas for improvement.

All the above should be regarded as essential elements within church governing bodies. Of particular importance is an honest, periodic review of board effectiveness.

Charity reporting changes: SORP 2026 vs audit thresholds

#Charity Governance & Regulation, #News, #Encouraged Action

The New Charity SORP published 31 October 2025 will apply for all charities with accounting years starting on or after 1 January 2026.

However, some confusion has arisen because separate changes to audit and examination thresholds take effect at a later date. These are different rules, changing at different times.

One of the key changes the Charities SORP 2026 has introduced is three new income tiers to ensure that reporting is more proportionate to the charity’s size:

Tier 1: Income up to £500,000
Tier 2: Income between £500,000 and £15 million
Tier 3: Income over £15 million

These tiers affect the content and level of detail in financial reporting and trustees’ annual reports; they do not determine whether a charity requires an audit or independent examination.

Potential confusion arises because, separately, the Department for Digital, Culture, Media and Sport (DCMS) announced changes to accounting thresholds, for the purposes of audit and independent examination. Changes aimed at reducing costs and administrative effort for smaller charities.

These changes are expected to come into effect on 30 September 2026 and apply to accounting years that end on or after 30 September 2026.

The effect of this is that a charity must separately assess:

which SORP reporting tier applies (from accounting years starting on or after January 2026), and
whether it meets the audit or independent examination thresholds (accounting years that end on or after September 2026).

These assessments are related only by income levels, not by purpose or effect.

ACAT is holding training on the new SORP in February. Book your spot for an introduction to the Charity’s SORP.

Trusting AI: let’s be cautious here

#Church Life & Community, #Opinion, #Information Only

The recent Grok AI debacle has brought up a pretty fundamental question for churches and charities: can we really trust these AI systems?

Now, there are plenty of upsides to using AI in church and charity work. It can save a ton of time on the nitty-gritty tasks like making schedules and keeping track of membership records. And if used wisely, that’s got to be a good thing, freeing up people to focus on the important stuff like community building and pastoral care.

But then there’s the whole question of using AI to do research, prep sermons or lead discussions about faith, discipleship and governance. The danger is that the summaries that AI churns out can look and sound like the real deal, but the sources can be murky at best. If you just swallow what AI tells you without questioning it, you risk spreading all sorts of misinformation and inaccuracies.

At the end of the day, it all comes down to trust. What guarantees do we have that AI generated info is actually the truth? Charity Digital has taken a step in the right direction with their “Conscious AI” initiative – basically an encouragement to organisations to treat AI with care and keep a close eye on the risks. These include stuff like biased decision-making, spreading misinformation, hackers, abuse, eroding trust and even potential damage to people’s mental health.

You’ve got to think about things like fact-checking what AI gives you, trying to spot those ‘hallucinations’ where it comes up with plausible but factually incorrect explanations, and making sure the data used is fair, impartial and anonymised. And then there’s the question of whether the risks are even worth it.

The truth is, AI is already all over our lives, and it’s doing some good stuff. So we need to take a step back and say ‘let’s be cautious here’. Unquestioning trust is just not a safe bet.

Financial year-end – Independent examination: How prepared are you?

#Charity Governance & Regulation, #Opinion, #Encouraged Action

For those charities and churches with a 31st December financial year end, and below the regulatory threshold, thoughts should have now turned to the independent examination process.

For the treasurer or financial administrator responsible, the danger is to assume that the process adopted in previous years is still effective and will continue.

Whatever the past experience, it is always good practice to consider whether the basic elements of a smooth independent examination are in place or could be improved.

With that in mind, some key questions to reflect on:

Is there a formal agreement with the independent examiner (I.E.) which sets out the expectations of both parties, the timescale for the examination and the fee payable?
Has a list of the documents required been prepared, and are they readily available?
Does the I.E. understand the organisation, has a clear view of its systems, activities, available resources and how they have been used?
Are the accounting records in good order, up to date, and comply with statutory requirements?
Do the accounting records fully support the financial statements and prepared accounts?
What analytical process will the I.E. follow, and has this been discussed and clarified?
Have any unusual items in the accounts been noted in advance for the I.E. with explanations?
Are accounting policies and procedures up to date and readily available?
Where a Trustees’ Annual Report is required, are the financial statements consistent with any financial summary included?
Are there unresolved issues from the previous year? If so, is a written explanation available?

The above questions are not exhaustive, and reference should be made to the Charity Commission Guidance notes.

The suggestion is that a few minutes considering what the independent examination will involve and prior discussion with the examiner could save time, additional expense, and be the basis of a “stress-free” process.

The Scouting motto “Be Prepared” is a useful maxim even in this context.

The Methodist Covenant Service – An annual commitment

#Church Life & Community, #News, #Encouraged Action

Most of us at some time or other have tried unsuccessfully to make New Year’s Resolutions. Essentially, these involve doing things differently with a view to personal improvement and/or a better relationship with those around us.

Since the early days of Methodism in the mid-eighteenth century, at the start of a new year, Methodist church members make a distinctive commitment both personally and as a worshipping community.

This is in the form of a special service known as the Annual Covenant Service, in which church members are invited to renew their personal and corporate relationship with God.

Although the content of the Covenant Service has changed over the years, the emphasis is on God’s readiness to enfold us in generous love. A love which we are undeserving of and respond to in penitential thankfulness. In the service, the Church joyfully celebrates God’s gracious offer that “I will be their God and they shall be my people”. All of which owes a great deal to John Wesley’s early Puritan influences.

Often celebrated on the first Sunday of the year, this special service is at the heart of Methodists’ devotion and discipleship, including their dedication to working for social justice, an important part of putting discipleship into practice.

However, as we begin a new year, the Annual Methodist Covenant Service is one example of an opportunity as a worshipping community to renew our commitment to God and the work to which He has called us in His Church.

I suspect other denominations and church groups have similar, but less formal, services of commitment, which would be helpful to learn about.

A Happy New Year to you. I know that many of you are looking at preparing annual accounts for your last financial year, as it is the same as the calendar year. Here are some enquiries relating to this process that may help you.

Terminology – part 1

Q: I have a technical question regarding CC16a – part B5 (Liabilities).

A: Contact details were supplied, but first, I looked at the church’s accounts for the previous year-end. The church is a Registered Charity, so I was able to see the accounts using the Charity Commission search facility.

I wanted to do some research before responding to find out what the enquirer is looking for. A quick glance of the accounts indicated that they are prepared on an accruals basis. They had a ‘Statement of Financial Activities’ and a ‘Balance Sheet’. Charity Commission document CC16a is for churches preparing their accounts on a Receipts and Payments basis. Churches who prepare their accounts on an accruals basis use CC17.

What I hadn’t done was to notice the Notes to the accounts which state that they are prepared on a Receipts and Payments basis! But the issue is that there must be no ‘mix and match’. It’s got to be one or the other. This is a quote from our handbook – from the Member Area of our website – Chapter 5, Section 3e:

“e. Use of words, terms and basis

Care should be taken to ensure that no misleading words or terms are used in the Account or Statement. For example, if the word “income” is used in order to distinguish monies coming in from activities from those that endow the charity or represent a loan or loan repayment or else the proceeds of disposing of an investment asset or of an asset that was being used for activities, it must be “income receipts”. Whereas the word “expenditure” should not be used in the receipts and payments account since it suggests the use of the accruals basis of accounting, it would be acceptable to use a heading of “payments for activities” to distinguish them from “purchase of investments”, “purchase of assets for use by the charity”, “loan repayment”, etc.

The law does not allow for “halfway” house forms of accounting. It cannot be part “receipts and payments” and part “accruals”. If accruals are included, the full “accruals” basis must be applied in accordance with the Charities SORP and its related Regulations for “true and fair” accounts, including the preparation of a full balance sheet as stipulated by the SORP and its Regulations, instead of a Statement of Assets and Liabilities.”

The enquirer’s problem is that he hadn’t processed some entries quickly enough at the end of 2025, so they are entered as 2026 transactions. I explained that you can’t have a hybrid set of accounts. On a Receipts and Payments basis, the entries will be shown as Liabilities in the Statement of Assets and Liabilities [SoAL].

Terminology – part 2

Q: If we are not supposed to use the words Profit & Loss, what words do we use?

A: “Profit & Loss” are words used by commercial enterprises; charities/churches are non-profit, so we can’t use this terminology. Colloquially, I use “Surplus/Deficit”, but in your annual accounts, you have the term “Net income”, which means ‘Income less Expenditure’. Churches preparing Receipts and Payments accounts [R&P] would use the term “Net receipts” as “income” is reserved for charities/churches preparing accruals accounts. With the best will in the world, I can’t change the terminology that is used in accounts – it’s helpful to see an extract of a template from the Charity Commission – CC16 for R&P accounts and CC17 for accruals accounts.

Terminology – part 3

Q: We are a registered charity (pursuing CIO status). Our auditor has retired and we are seeking a new one. Do you have a list of accountants who perform this role for churches?

A: Terminology can be awkward. ‘Auditor’ has a particular meaning in charity accounting, so unless your assets are over £3.26m and your income over £250,000, you don’t require a ‘Professional Audit’ but an ‘Independent Examination’, carried out by an Independent Examiner [IE]. We don’t have a list of suggested accountants, but I trust that this resource leaflet available on our website (login required) will help you with your research:

https://www.acat.uk.com/resource/recommendations-when-looking-for-an-independent-examiner/

Posting your Annual Report and Accounts to the Charity Commission

Q: Our financial year-end is 31/12. We have accounts with COIF and a High Street bank. COIF repatriate funds using BACS (3-day process)
On 30 December, our COIF account was debited £15k for a transfer to our bank account. So, as at 31 December, the £15k is “in the ether”, showing on neither COIF nor bank statement. I propose to show it as part of the COIF balance with a suitably worded note and evidence of the withdrawal.
What is your view/guidance on this please?

A: As the church is a Registered Charity, I expected to be able to view the bank balances in the previous year’s accounts using the Charity Commission search function – to see what is happening, to get an overall picture.

The published report and accounts are very ‘sparse’! The treasurer can’t understand why – he sent me his accounts, and what is posted is quite different! It looks as though the church secretary has uploaded something different! One needs to be careful that the correct paperwork is uploaded when the Charity Commission returns are made.

The short answer in this case is that the transfer remains with the previous bank and not the new one – until the transfer is complete.

Fundraising support for your church

Fundraising is never far from the minds of church treasurers and trustees. It also features regularly in various guises in the ACAT Newsletters and weekly website posts.

So, at the start of 2026, it is appropriate to review Ecclesiastical’s support and advice on their fundraising hub.

The hub has easy-to-use guidance on fundraising involving four basic steps

Where to start?
Researching donors
Making the Ask
Saying “thank you.”

These basic steps, followed by a simple checklist, include helpful considerations when planning fundraising. The Checklist includes

A strong vision, which clearly expresses what your church would like to achieve with the funds raised.
A ‘shopping list’ for your project or activity, simplified into easily identifiable items requiring funding.
A fundraising person (or volunteers), with sufficient time to dedicate to fundraising
A church leadership group willing to commit time and resources to fundraising.
A fundraising plan that practically defines how it is intended to implement fundraising.
Research and recording of potential donors and funders.
A compelling and clear case for support which conveys the need for the project.
Defined responsibility for demonstrating good governance structures in place.
Monitoring and evaluating the impact of the project.

How is your church responding to climate change?

#Church Life & Community, #Opinion, #Encouraged Action

Whilst scepticism on climate change is acknowledged, nevertheless, as stewards of the changing natural world, we cannot ignore what is happening around us. The question arises, how do our churches respond to the changes in climate, including the effect on our buildings, both in terms of the external structure and the internal worship and activities space?

Are we taking seriously the need for our heating and lighting systems to be as efficient as possible using green energy, investing in and implementing cost-effective measures wherever possible?

Climate change is affecting church buildings. It is therefore important to take steps to reduce our carbon footprint and to consider the steps that could be taken to reduce any risks that might result from climate change.

Maintaining your church building – A well-maintained building will help protect against weather extremes, but when was the last time you critically reviewed your maintenance plan to identify any improvements that could be made in the light of changes in weather patterns?

The impact of weather extremes – Is there a plan to deal with storms, winter cold, flooding, and tall trees close by which might topple and fall on church buildings? Have your lightning conductors been inspected recently?

Heating & lighting the church – Are the heating and lighting systems as efficient and managed as effectively as they could be? Whilst acknowledging that investing in energy-efficient equipment is not cheap, is there a replacement plan to install modern plant, such as heat pumps or biomass boilers?

Protecting our environment is arguably an essential aspect of stewardship. It would be helpful to know what steps are being taken by members’ churches to mitigate the effects of climate change.

Welcome, Guest

ACAT Newsletter January 2026

ACAT’s Newsletter

Final Thought

Thank you for your support!

ACAT Newsletter January 2026

ACAT’s Newsletter

ACAT’s Newsletter

What’s new

New Charity Governance Code in force

Charity reporting changes: SORP 2026 vs audit thresholds

Government announces funding for places of worship – LPW Grant Scheme replacement?

Regulator issues official warnings to two Church of England Dioceses

Trusting AI: let’s be cautious here

ACAT job vacancy – Membership helpline support

Enjoying this month’s highlights?

Points to Ponder

Financial year-end – Independent examination: How prepared are you?

The Methodist Covenant Service – An annual commitment

New Year priorities – Things to ponder

Helpline Q&A

Terminology – part 1

Terminology – part 2

Terminology – part 3

Posting your Annual Report and Accounts to the Charity Commission

Partners in Ministry

Fundraising support for your church

How is your church responding to climate change?

Over £300k donated to churches in the last 12 months!

Spring Training Programme

Charities Engagement Team – Upcoming webinars

Did you know?

Final Thought

Thank you for your support!