UK charity regulators are considering whether to amend proposed tiers for accounting requirements after some in the sector raised concerns about the suggested levels in a consultation.
The draft Charities Statement of Recommended Practice (SORP) proposes three tiers of reporting requirements: the first applying to charities with an income below £500,000, the second to charities with a turnover between £500,000 and £15m and the third concerning charities with revenues over £15m.
According to the SORP-making body, there is widespread support from charities for the introduction of tiered accounting requirements but disagreement on what their thresholds should be.
As a result, the body is “considering all of the views received in determining the way forward with tiered reporting”.
In a blog summarising the responses to the recent consultation on the new requirements, the SORP-making body said 89% of respondents endorsed the move to a three-tier reporting framework.
“However, there was no clear agreement on what the threshold levels should be,” the blog said.
“Many suggested raising the tier one ceiling above £500,000, and some proposed aligning thresholds with audit limits.”
For example, in its response the Charity Finance Group proposed a separate SORP for “micro-tier” charities with incomes below £10,000, consisting of “musts” only and suggested increasing the second tier level to match the charity audit threshold.
Large charities’ views
Some large charities also supported reducing the burden for smaller charities in their responses.
For example, Cancer Research UK also called for “a ‘micro Charities SORP’ for very small charities that are required to prepare accrual accounts”.
City Bridge Foundation said that there was an “opportunity to do more for smaller charities” and that tier one should be linked to audit thresholds.
“As grant funders who use charity accounts for our due diligence, we do not consider that increasing the threshold for tier one to this level would adversely affect our ability to carry out due diligence,” it said.
Holistic view would be ‘preferable’
Meanwhile, the audit thresholds for charities were also recently subject to a separate consultation.
The Institute of Chartered Accountants in England and Wales suggested that it would have been “preferable” if the government’s financial thresholds consultation and the SORP proposals “could have been considered on a holistic basis, for instance, in a single consultation covering all the thresholds”.
It added that “the threshold between tiers one and two could be set much higher than the proposed £500,000, and would support it being set as the audit threshold”.
SORP-making body response
In its blog, the SORP-making body said: “We are aware of potential threshold changes outside of the SORP and are seeking to support a system which maintains simplicity and clarity in tier definitions.
“In addition, we are aware of jurisdictional differences in audit thresholds, which reinforce the need to avoid conflating the reporting frameworks.
“The SORP-making body is considering all of the views received in determining the way forward with tiered reporting.”
It added that it “continues to consider the consultation feedback, alongside monitoring external developments” and is “finalising changes to the SORP”.
The final version of the SORP is due to be published next month and will apply to the accounts of relevant charities for reporting periods beginning on or after 1 January 2026.
The SORP-making body is comprised of the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland.
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