The New Charities SORP

The new Charities SORP has now been published. It details the required format and content of charity accounts, sets out the accounting treatments that charities should adopt, and provides guidance on many areas connected to the accounts.


What is the impact for charities?

The new SORP will provide improved guidance on existing technical areas, as well as guidance on new and topical areas.

In fact, it has been announced that there will be two SORPS:

  1. FRS 102 - one will reflect FRS 102 and will be applicable to those charities that prepare their accounts in accordance with the full UK accounting standards;
  2. FRSSE - the second SORP is available for those smaller charities that choose to adopt a reduced accounting disclosure framework (also known as the FRSSE, or Financial Reporting Standard for Smaller Entities).


The New SORPs

These take a “think small first” approach. The guidance is set out in a way that provides the rules that all charities must follow first, before stating the additional requirements for larger charities.

The SORPs also take a modular approach – fourteen core modules apply to all charities, and a further fifteen modules that provide guideline on specific matters.

The SORPs can also be customised so that those sections not applicable to you can be tailored out – this provides much more accessible guidance for smaller charities.


Who Do the Changes Affect?

All charities must prepare their accounts in accordance with the new SORP relevant to their organisation.

But there are additional disclosures for those charities that prepare their accounts under FRS 102. These disclosures will include restating the comparative information using the new accounting requirements, and a reconciliation of the surplus or deficit incurred under the new rules compared to the old rules.

These additional disclosures do not affecting charities adopting the reduced accounting framework via the FRSSE.


When do the changes came into force?

The new standard comes into effect for accounting periods commencing on or after 1 January 2015. This may seem a long way off. However, it’s not as easy as saying “let’s worry about this in 2015”.

For example, a charity preparing its accounts to 31 December will need to adopt the new standards for the year end 31 December 2015. This means that the comparative figures, for the year ended 31 December 2014, will need to be restated to reflect the new reporting requirements. And the opening balances for the 2014 accounts are taken from the Balance Sheet at 31 December 2013 - which will also need to be restated.


The New Charities SORP – What do I need to know?

Download a guide to key changes for FRS 102 and areas that will need to be considered as a result of the new SORP.



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