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New LLP SORP: get your accounting in order

16th December 2015

The revised SORP, published in July 2014, is effective for periods commencing on or after 1 January 2015 for LLPs adopting FRS 102 and the FRSSE.  It came into effect as a direct result of the new UK GAAP, however any changes to the accounting standards made after July 2014 are not reflected in the revised SORP.

Key differences from current LLP SORP

  • FRS 102 terminology is incorporated
  • The Members’ Report is no longer a statutory requirement
  • References to old UK GAAP are removed
  • Advises against the use of a single income statement
  • A SOCIE or reconciliation of Members’ interests is required as a primary statement
  • Post-retirement benefits guidance has been expanded

Changes to form and content of LLP financial statements


 -  Members’ Report
Income Statement Profit & Loss Account
Statement of Comprehensive Income Statement of Total Recognised Gains
and Losses
OR a single Statement of Comprehensive
Income combining both elements above
Statement of Financial Position Balance Sheet
Statement of Changes in Equity  - 
Statement of Cash Flows Cash Flow Statement
Notes to the financial statements Notes to the financial statements

Whilst a Members’ Report is no longer explicitly required under the new SORP, many of the disclosures contained therein (principal activity, designated members, policies for members’ drawings) are still mandatory requirements and must therefore be included elsewhere within the financial statements if the LLP elects not to prepare a Members’ Report.

Members’ capital

When members’ capital is classified as a financial liability it may constitute a financing arrangement and therefore require discounting to present value.  However, capital is often repayable on demand or at short notice and this therefore may be disapplied.

A SOCIE should be presented as a primary statement detailing the movement in “Members’ other interests”.  FRS 102 requires certain disclosures relating to an entity’s share capital.  For entities without share capital, such as an LLP, equivalent information is required to show changes in the period for each category of equity.  This requirement is satisfied by the inclusion of a “Reconciliation of members’ interests” table within the notes, however this table may instead be included as a primary statement instead of a SOCIE; where this option is taken full comparatives are required for the prior period.

Members’ current accounts

Clarification has been included in the new SORP regarding disclosure of the protection afforded to other creditors on a winding up and the ability of members to reduce the LLP’s equity.  The SORP now requires the notes to the accounts to disclose any limitations on the members’ ability to reduce “members’ other interests”, or state that there are no such restrictions.

Related parties

FRS 102 requires the disclosure of total compensation paid to key management personnel, which may comprise elements of employee remuneration and profit attributable to members.  Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling the activities of the LLP, directly or indirectly, whether designated members, members or employees.

Post-retirement benefits

Guidance in this area has been significantly expanded and amended in line with the new UK GAAP.  The SORP includes a helpful flowchart at paragraph 76B to assist in determining which guidance applies.

Our dedicated Financial Services team are trained and knowledgeable of the new SORP and are able to assist LLPs make the transition as smoothly as possible. If you would like to discuss the changes and how they will affect your business, please get in touch with myself or your usual haysmacintyre contact.

Bernadette King
Partner, Head of Financial Services