The Charities SORP (FRS102) – disclosures required for larger charities

05/03/2016

Following our recent article on the revisions to the Statement of Recommended Practice (SORP) 2015 we thought it would be useful to provide a reminder of the main additional accounts disclosures required from larger charities.

Charities with an income over £500,000 are defined as ‘larger’ charities and have more extensive disclosure requirements than smaller charities, particularly in relation to the Trustees’ report. The original SORP 2015 defined ‘larger’ charities as those with income over £1m. This reduction to £500,000 will mean many charities will now no longer be able to take advantage of the reduced disclosures.

There are a number of key exemptions available to smaller charities which are lost when preparing the Trustees’ Report for a larger charity. The following areas must be covered in the Trustees’ report:

• An explanation of the charity’s aims, strategies to achieve these and criteria to measure success. Any significant activities undertaken should also be detailed;
• An explanation of the social investment policies;
• Information on grant making;
• Information on volunteers;
• Details on reserves, including the amounts held at the period end, and details of restricted or designated funds. Information should also be given on the likely timing of expenditure of designated funds. A comparison of the reserves held with the charity’s reserve policy should be given, with an explanation of how the two amounts will be brought in line;
• Details of significant events which have affected the financial performance and position of the charity, including the financial effect of significant events;
• Details of the investment policy where investments are material;
• A description of the principal risks and uncertainties facing the charity and its subsidiary undertakings, as identified by the charity trustees, together with a summary of their plans and strategies for managing those risks;
• Any factors that are likely to affect the financial performance or position going forward;
• Details of the charity’s plans for the future;
• Details of how the charity is constituted, its governance and management structures, and how its trustees are trained;
• The arrangements for setting the pay and remuneration of the charity’s key management personnel and any benchmarks, parameters or criteria used in setting their pay;
• The name of the chief executive, or equivalent, and details of professional advisers.

The SORP encourages smaller charities to include some or all of the additional disclosures if they are relevant to stakeholders.

This list covers the main additional disclosures required from larger charities however the SORP contains detailed information and so should be referred to when charities are preparing their accounts to ensure full compliance with all disclosure requirements. It can be found by clicking here.

For advice on disclosures for larger charities, please contact Elizabeth Irvine.