Updated Charities SORP accounting rules published

Last month, an updated version of the accounting and reporting rules that charities must observe was published.

The purpose of this publication, which is effective for reporting periods beginning on or after 1 January 2019, is to combine and consolidate a number of changes that have been issued in recent years and that, until now, were recorded in independent documents.

The latest Statement of Recommended Practice (SORP), known as Charities SORP (FRS 102), was made available in 2014 and was effective from January 2015.

Since then, however, two update bulletins have been released – largely due to changes in UK accounting standards – which means that charities have needed to refer to multiple texts when assembling their annual reports and accounts.

The first of the bulletins re-defined ‘larger’ charities as those with a gross income exceeding £500,000 in the UK.

The second sought to correct an error, whereby the SORP-making body had failed to communicate the requirement for everything in charities’ accounts to have comparatives.

This particular update impacted all charities and has resulted in charity accounts getting longer, an unfortunate fact that we do not expect to be addressed until the next SORP.

Nigel Davies, joint chair of the SORP-making body and the SORP committee said: “We’ve been promising to issue a new edition of the SORP, to bring the bulletins and the SORP text together, for a few months. So, we’re making good on the promise we made to the sector.”

SORP Governance review addresses size, scope and representation within the committee

In June, an independent review of the governance of the SORP was released which suggested that the SORP committee should become smaller, that the scope of its role should be re-defined and that it should welcome involvement from donors, funders and representatives of smaller charities.

The committee itself has questioned the appropriateness of these recommendations and reports that many stakeholders are comfortable with current arrangements.

Complying with the SORP

The SORP-making body does intend to issue two new information sheets, supplementing the three which have been in circulation since 2017, to assist charities with compliance.

However, it is worth bearing in mind that information sheets are purely advisory and adhering to them is not compulsory.

How can George Hay help?

We have a dedicated team of experts, ready to deliver accounting, business advisory and outsourced management services tailored to the needs of charities and organisations operating in the not-for-profit sector.

Our experienced partners and accountancy professionals are familiar with the regulatory requirements affecting charities and we understand the unique challenges impacting upon the sector, including the need to operate as efficient, cost-effective businesses.

We can support Trustees, assist you with planning, advise you on diversification of income and help you to set accounting policies consistent with SORP – amongst many other things!

In all our work with the Third sector, our proactive and practical advice is designed to help you find financial stability whilst also achieving your core objectives.

To talk to us about how we could work with your charitable organisation, get in touch with one of the team, or send us a message using our online contact form.

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