Charities call for simpler annual reporting guidance

12 Mar 2021 News

Charity trustees want clearer, simpler guidance on annual reporting, according to research from the ICSA: The Chartered Governance Institute (ICSA).

The SORP Trustee Engagement Strand Feedback Report, published by ICSA, suggested that charity boards wanted guidance which was more accessible to trustees who do not have a professional financial background.

The information was compiled as part of an ongoing consultation on reforming the SORP, which is designed to help trustee boards prepare their charity’s accounts. 

The report also called for the guidance to use more plain English, with one respondent quoted in the report saying that the SORP was “unintelligible” in places.

ICSA said it was “a concern” to find that the size of trustee boards reported by a minority of respondents did not meet agreed governance standards, because they were either too small or too large.

No more jargon

The reforms to the SORP suggested by respondents included reducing the need to repeat information from previous years, better linking financial details with the charity’s social impact, and making it “shorter, more concise” and reducing jargon.

The survey also showed some trustees wanted the SORP to strengthen reporting of pensions liabilities, and to include environmental impact reporting.

Some boards don't meet regulatory expectations

The report also said: “It is a concern that some charities (13% of respondents) have a trustee range which would not meet agreed governance standards or regulatory expectations, such as having too large a board or too few trustees to ensure effective decision making and accountability.”

This included charities which said they had three trustees or fewer, and charities with more than 16 trustees.

Reporting should 'tell a story'

Louise Thomson, head of policy (not for profit) at ICSA, said: “The survey is part of the review that the Trustee Engagement strand is undertaking to decide if the content of the SORP meets the needs of trustees, as both preparers and users of charity accounts and annual reports.”

She added: “Feedback to the survey highlighted a desire for annual reports to be shorter and more concise, written in plain English and for more visual information such as infographics to be used to communicate key facts. Overall, a call to better ‘tell the story’ of a charity, in terms of the activity, impact and financials was clear.
“The survey findings suggest that trustees would like a standardised format of reporting to be developed that is appropriate for most charities. Amongst other suggestions, they would like to see less repetition and more use of cross-referencing and hyperlinking to other documents.

"Some trustees also suggested that environmental impact reporting should be included, which is a good suggestion as environmental, social and governance issues are something that all charities should now be considering in depth.”

The report is based on a survey of over 400 people, conducted between October and December last year. 81% of respondents were trustees, while the majority of other respondents worked in charity finance. 

Most represented charities with an annual income under £500,000. 

The April issue of Charity Finance Magazine, published by Civil Society Media, will carry the results of further research into attitudes towards the SORP.

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