The Shadow Sorp Working Party has identified a number of areas in the draft of the new accounting framework for the charity sector “where an opportunity has been missed”.
In its response to the draft of a new Statement of Recommended Practice that has been outlined by the Charity Commission and the Office of the Scottish Charity Regulator, the working party called for clarification and further consultation.
Don Bawtree, head of charities at BDO, who is leading the shadow committee, said: “There are certain aspects of the proposed new Sorp that need careful additional consideration, and in some cases wider, more extensive consultation.”
He added that the draft Sorp “attempts to justify” accounting treatments which are “popular with the sector” or have been “longstanding practice” and that “in many areas, an opportunity has been missed to properly update, enhance and clarify guidance and requirements”.
The committee’s response points out that the draft Sorp is “currently silent on accounting gift aid schemes” and argues that the retail gift aid scheme is the sort of area where the Sorp should provide advice on.
The six areas highlighted by the committee as needing further consideration are:
- Principles of income recognition in respect of legacies, volunteers and donated shop stock
- Whether the Statement of Financial Activity should continue with a multi-column approach. The committee would like “to have a proper debate on how the Sofa can be made more ‘user-friendly’”.
- The rationale for the treatment of endowment funds
- The definition and presentation of some restricted funds
- Rules for smaller charities
- What charities disclose about reserves
Previously Bawtree criticised the draft Sorp for being too long and complex.
The official consultation closes on 4 November.
View the full initial response to from the Shadow Sorp Working Party here.
