Charities SORP (FRS 102) – a view on what to expect

22 March 2017

No sooner did the sector implement the new FRS 102 SORP, than we began to discuss the shape of the next iteration. Following a consultation that closed in December 2016, the results of the exercise are due to be published this year. Although this will not change financial statements reported in 2017, it could provide an insight into the direction of travel for the next SORP, and whether further time and costs will need to be spent in complying.

The aim of this consultation, was to identify any necessary changes in good time to prepare the next Charities SORP (FRS 102) with an exposure draft of the next SORP anticipated for 2018. Although the consultation followed a similar format with a series of questions, these were much more of a ‘free-form’ style, requesting the respondents to make comments and suggest changes rather than answer tight specific questions. Questions were asked about the style and the accessibility for smaller charities of the new SORP and whether there needed to be a third tier of reporting by only the largest charities.

The consultation asked for comments on some specific areas within the Trustees’ Annual Report and the accounts:

  • Better integration of the report with the accounts
  • Detail of reporting
  • Key facts summary
  • Reserve definition and guidance
  • SOFA – more specific definitions of support costs and fundraising costs
  • The mixture in the SOFA between revenue and capital items.

The consultation also suggested certain themes for future development:

  • Making a difference to public benefit
  • Risk Management
  • Going concern
  • Enhanced analysis of expenditure
  • Disclosure of who funds the charity
  • Disclosure of key facts

However, although we welcomed the opportunity to comment on the consultation, we did not feel that a third tier was required and that many of the suggested areas for research and the potential new themes have already been fully addressed in the existing SORP or in other Charity Commission guidance. We agreed that there should be a greater emphasis on impact reporting but do not believe that the Key Facts summary will aid transparency or make the financial statements more accessible. The suggestion that “pence in the pound” figures be included, might lead to disclosure that is of little use considering the vast variety of charities in the UK and Ireland.

Our full response to the consultation can be found on our website.

We expect a full response to the consultation document to be published later in the year.

By Anjali Kothari, Partner, Kingston Smith. Anjali can be contacted at and +44 (0)20 7566 3656.