The lowest income threshold of £500,000 proposed for the next version of the charities accounting framework is too low and could burden smaller charities, audit firm RSM UK has said.
The updated version of the Charities Statement of Recommended Practice (SORP), a consultation on which closed today, proposes three tiers of guidelines based on annual income levels, the lowest of which is £500,000.
Nick Sladden, partner and head of charities at RSM UK, said that while introducing three tiers was a “positive step towards supporting proportionality”, the £500,000 threshold “risks putting additional burden on smaller charities”.
Sladden urged charity regulators to consider raising the bottom tier to at least £1m, in line with the existing charity audit threshold.
However, the charity audit threshold is also being reviewed by the Department for Culture, Media and Sport (DCMS), and could potentially rise to £1.5m in line with inflation.
RSM UK recently called for the charity audit threshold to rise even higher, to £2m, and Sladden suggested the first SORP tier could match this.
“It’s also essential these thresholds are reviewed regularly to ensure they remain appropriate,” he added.
Overall support for requirements
Sladden also called for the enhanced governance disclosures set out in the updated SORP to align with those set out in the Charity Governance Code.
He added: “Further steps to enhance the quality of reporting could include updating the existing model of annual reports to reflect the requirements of the new SORP, as well as providing practical guidance such as examples of good practice on an annual basis.
“The SORP clearly sets out which reporting requirements apply to each tier, which should make it straightforward for charities to decipher which they must adhere to.
“Overall, we support the reporting requirements and believe they are proportionate to the needs of charities of varying sizes for the most part, but would encourage some adjustments are made to avoid a scenario where significantly more onerous reporting requirements are triggered, particularly for those on the smaller end of the spectrum.”
After feedback from the SORP consultation has been considered, new reporting requirements are due to be introduced in January 2026.
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