The 2015 Charity SORP was introduced for reporting periods beginning on or after 1 January 2015. As we move through 2017, the good news is that most charities should have prepared at least one set of accounts under the new regulations, and the pain of transition is behind us.
However, the bad news is twofold:
Firstly, for accounting periods commencing on or after 1 January 2016, the FRSSE Version of the 2015 SORP has been withdrawn, meaning smaller charities will have to consider the full measurement and recognition criteria of FRS102. In practice, this means that should you have employees, long term debtors or creditors or make use of any non-basic financial instruments the figures in your accounts will potentially need restatement.
Secondly, the SORP-setting body has already consulted on changes for the next SORP, with the consultation closing in December 2016. We have ‘enjoyed’ a consistent set of accounting regulations from when SORP 2005 was introduced over 10 years ago but it is anticipated that a new SORP will be in place for accounting periods beginning on or after 1 January 2019. The new SORP Exposure Draft should be issued during 2018, which means that we will shortly all be worrying once again about the implications of a new SORP!
The upside to this is that the timing is linked with the Financial Reporting Council’s triennial review of FRS102 – so any changes to these underlying accounting regulations are likely to be minor in comparison to the introduction of FRS102, which marked a full re-write of existing legislation. This should allow the SORP committee to focus on making amendments to the SORP that are more likely to aide clarity, understanding and accessibility, rather than just playing catch up with changes to the underlying regulations.
- The SORP making body has identified six themes for the changes they would like to see:
- going concern
- enhanced analysis of expenditure
- disclosure of funders and
- disclosure of key facts
These themes appear to be influenced by recent media comment on the charity sector. I would prefer the focus to be on bringing clarity to charity accounts, making them easier to understand, especially for the non-accountant. The sector, however, does need to provide clearer analysis of expenditure, in order to provide the public with assurance on where and how charitable funds are spent, so I am pleased that this has been identified as one of the key themes for the new SORP.
For smaller charities especially, the statutory accounts may be the only publicly available document that exists so it is vital that they accurately and positively tell the story of the charity. This will give assurance to donors, funders and beneficiaries and help to enhance the reputation of the charity, its trustees and its staff and I welcome any changes to the SORP which achieves this objective.
By Andrew Roberts, Menzies LLP
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