Impact of the new Statement of Recommended Practice (SORP) for charities
The new Statement of Recommended Practice (SORP) for charities, which interprets the revised accounting standards under FRS 102, has finally been issued.
This is the first new charity SORP since 2005. The new SORP has introduced presentational changes to the layout of the SOFA to be more easily understood by the lay reader of charity accounts. While there are very few changes in terms of accounting policies, broader changes in accounting framework managed by the FRC have resulted in some changes to the accounting treatment and disclosures. Such as, income recognition, accounting for pensions in multi-employer defined benefits schemes, valuing some goods and services, accounting for branches and disclosures on staff pay in particular.
SORP becomes two
Two new SORPs were needed due to changes in UK accounting following the introduction of Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) that was issued by the Financial Reporting Council in March 2013. In their joint role as the SORP-making body for UK charities, the regulators have been working closely with the sector-based SORP committee to write the new SORPs, which included a public consultation held from July to November 2013. Subsequent developments have meant that the production of a separate SORP for organisations that will wish to follow the Financial Reporting Standard for Smaller Entities (FRSSE) was essential.
However, the new SORPs provide a comprehensive framework for charity accounting that all charities preparing accrual accounts must follow. The new SORPs apply to financial years beginning on or after 1 January 2015.
To provide you with a comprehensive overview on the changes, we are holding a series of events, please visit http://www.haysmacintyre.com/events to register your interest.
If you have any specific questions in the meantime, please don’t hesitate to contact Richard Weaver, Head of Charities and Not for Profit.