Two separate Statements of Recommended Practice are needed to govern charity accounts, according to recommendations published today by the Charity Commission and the Office of the Scottish Charity Regulator.
But the two regulators reject the idea of giving the name and salary of the highest paid individual in a charity.
The Statement of Recommended Practice (Sorp) governs charity accounting. The two regulators are the joint Sorp-setting bodies and are advised by the Sorp Committee, a group of accountancy experts involved in the sector.
Last year the Sorp Committee consulted on a new Sorp which will apply to charity accounts for the period from 1 January 2015 onwards.
The committee yesterday published an analysis of responses to that consultation, and in that analysis has recommended that two Sorps should be developed.
The first Sorp will govern those charities who choose or are required to follow FRS 102, a financial reporting standard intended for mid-sized entities published by the Financial Reporting Council, which comes into force at the start of 2015.
FRS 102 will govern charitable companies and all charities above the £500,000 charity audit threshold, but other charities can choose to follow it if they wish.
The second Sorp will serve smaller charities which choose to follow the Financial Reporting Standard for Small Entities (FRSSE), a standard designed for smaller organisations.
This standard is likely to be replaced shortly by the Financial Reporting Council, and the Sorp Committee has said it wished to avoid the disruption to the Sorp which would come if that occurs.
The committee also recommends that all charities preparing accruals accounts – those with an income over £250,000 and all charitable companies – will now have to disclose salary information. At present this only applies to charities over the audit threshold.
However the Sorp committee rejected changes proposed by some charities which would require the disclosure of individual salaries. Instead, charities will still only have to disclose salaries over £60,000 in bands of £10,000.
It also recommended that charities will not have to separately disclose income from government, despite a minority supporting this view.
The analysis found that 92 per cent of respondents supported a new approach adopted by the committee, which involves splitting the Sorp into modules. And 69 per cent agreed that smaller charities will be better served by the new Sorp.
Sam Younger, joint chair of the Sorp Committee and chief executive of the Charity Commission, said: “The sector will get a Sorp that works with them – particularly now that there will be two Sorps which allows for the specifics of different accounting standards.
“In a number of ways, what the Sorp asks of charities exceeds general accounting standards and we should be proud of this higher expectation. After all, the public have high expectations of charities - and quality financial reporting and accounting are essential to maintain their trust and confidence in the sector.”
The proposals put forward in the analysis will now be considered by the Committee on Accounting for Public Benefit Entities, and must be approved by the Financial Reporting Council.
