Charity Commission and the OSCR publish new SORPs
The Charity Commission and OSCR have published two new Statements of Recommended Practice for accounting and reporting by charities (SORPs) on a dedicated website. All charities in the UK that prepare their accounts on the accruals basis must follow the recommendations in the new SORPs for reporting periods starting on or after 1 January 2015. The new SORPs replace the current SORP (2005) in its entirety.
Smaller charities can choose to adopt either FRS 102 or the Financial Reporting Standard for Smaller Entities (FRSSE), the two SORPs provide guidance on applying FRSSE and FRS 102 respectively.
Each SORP is designed to be accessed in modules and a navigation tool is being developed (to be launched "soon") to enable charities to select those modules that apply to their circumstances. Helpsheets have been published on the difference between the two SORPs and on the major changes from SORP 2005.
PLC says that charity practitioners are unlikely to need to get to grips with the detail of the new accounting requirements. However charities should be aware that if they prepare accounts on the accruals basis then they must follow the recommendations in the new SORPs for reporting periods starting on or after 1 January 2015, and that this applies to both the Commission and OSCR.
Charities in general may need to be aware of the following significant changes from SORP 2005:
- All charities will be required to explain their policy for holding reserves and to state the amount of those reserves and why they are held. If charity trustees have decided that holding reserves is unnecessary, they must disclose this and the reasons for their decision.
- Larger charities (those that are required by the Charities Act 2011 to have an audit) will be required to explain their social investment policies and how any programme related investments contributed to the achievement of their aims and objectives, explain the financial effect of "significant events", in addition to reporting the significant charitable activities undertaken; provide 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 such risks (this replaces the previous risk management statement); and disclose 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.
- Also, FRS 102 requires all charities to disclose the number of staff paid £60,000 or more in bands of £10,000 from £60,000 upwards and to disclose the total paid to key management personnel.
Posted on: 25/07/2014
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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