Revision to the Charities Statement of Recommended Practice (SORP)
Just as many charities are preparing, or are planning to prepare, their first accounts under the revised Charities SORP, a number of amendments have been issued. The changes are mandatory for periods commencing 1st January 2016, however, it is important to consider them now as charities can apply the revised SORP for reporting periods starting on or after 1st January 2015.
If charities do decide to adopt the changes early they must adopt all of the relevant changes. It may be useful to many smaller charities to adopt early, we explain why below.
- The main changes are as follows:
The FRSSE SORP has been withdrawn and charities will have to follow the FRS 102 SORP. If you were planning to use the FRSSE SORP you should consider whether this is the best course of action as it will only be applicable for one year. Having updated the content and format of your accounts this year you would need to do so again next year. It may be simpler to adopt the FRS 102 SORP straight away.
- Only larger charities are required to prepare a statement of cash flows. This is good news for many smaller charities that have not included such a statement in the past and found the prospect of doing so rather daunting. This is where early adoption may help.
- The definition of a larger charity has been revised to those charities with income over £500,000. This is a reduction from the threshold of £1m in the original SORP. This means that charities with income between £500k and £1m will have to comply with the more extensive disclosure requirements of larger charities – these primarily relate to the Trustees Report. Charities in this group will need to consider whether to opt for early adopt as this will mean the form and content of the accounts will only need to be updated once.
There are a number of other amendments in the following more specialist areas:
- Donated goods
- Goodwill write off periods
- Impairment of assets
- Charity mergers
- The definition of related parties