28 June 2017

The charity SORP: an update

We provide an update on SORP FRS 102 for charities, including what we know about the new SORP scheduled for 2018.

Preparers of charity accounts will have very recent memories of adapting to SORP 2015 and FRS 102. Those who adopted the FRSSE SORP will be making the transition now. However, the SORP has already been amended via the Charities SORP FRS 102 Update Bulletin 1, which is in effect for accounting periods commencing 1 January 2016, with an updated FRS 102 and new SORP scheduled for 2018. Most readers will be familiar with the update as it permits smaller charities to drop the statement of cash flow and consigns the short-lived FRSSE SORP to history.

The FRS itself has been updated, but you will only notice this if your charity is part of a group and there are properties owned by one group entity and rented by another, or inter-group loans.

A consultation exercise on the next charities SORP was carried out between May and December 2016. The findings of the consultation are yet to be announced but key areas of interest can be identified from the consultation paper. For most charities, SORP 2019 is likely to be much less of an upheaval than the transition to SORP 2015. It appears unlikely that there will be significant changes to accounting treatments or additional work required, though there does appear to be a focus on the trustee report. 

Charities with income greater than £10.2 million, however, might be wary. At present, the SORP has a base level of requirements and an additional layer for larger charities (typically those with income above £500,000). The consultation queried whether a third tier should be introduced, either to bridge the gap or on top of the existing levels. If this tier was introduced, it would most likely result in increased disclosure (particularly in the trustee report) for the largest charities and possibly a reduction below that.

For accounts being prepared now, however, it is important to remember that the FRSSE SORP is obsolete and the text in the SORP booklet and modules have not been amended to reflect the Update Bulletin 1. Those tasked with preparing accounts will therefore need to refer to both documents.

We wait to see the revised SORP and will, as ever, keep you informed as to the implications. 

If you have any questions in the meantime, please do not hesitate to get in contact. 

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