A research consultation has been opened today into the future of the charities Statement of Recommended Practice, the financial guidance which governs charity accounts.
The research consultation has been published by the SORP-making body, which is comprised of representatives from the Charity Commission for England and Wales and the Office of the Scottish Charity Regulator.
It covers the charities SORP based on a newly-introduced national reporting standard, FRS 102, which will apply to all charities with financial years beginning on or after 1 January 2016.
It will not cover a currently existing charities SORP based on another reporting standard, the FRSSE.
The consultation, which closes on 11 December 2016, aims to gather views of the SORP’s structure, any implementation issues that may emerge, and suggestions made by the SORP committee for its improvement.
The Financial Reporting Council (FRC) is expected to review FRS 102 next year, with the revised FRS 102 anticipated to take effect from 2019.
Any changes to the FRS 102 standard will require a new SORP; as a result the SORP research will inform the development of the next Exposure Draft of the SORP – which is likely to be consulted on in 2018.
Nigel Davies, head of accountancy services at the Charity Commission and joint chair of the SORP Committee, said: “We hope that sector practitioners and users of the charity reports and accounts will take the opportunity to tells us about what needs improving and share with us their ideas or solutions.
“The FRC is committed to a more frequent cycle of reviewing the standards that make up UK-Irish Generally Accepted Accounting Practice and now is a timely moment to feed in your ideas for change.”
Laura Anderson, head of enforcement at OSCR and joint chair of the SORP Committee, said: “When we published the new SORPs in 2014 we sought to develop a reporting and accounting framework that serves four charity law jurisdictions, each with its own reporting traditions and needs. We look forward to gathering views across the UK and Ireland on how the SORP can serve the charity sector well for the future. Please take part in this shared endeavour to make the SORP the best it can be.”
The SORP Committee is calling on the consultation to be read by donors, funders, financial supporters, preparers, auditors and examiners of charity accounts, trustees, employees and beneficiaries of charities and any others who may use charity accounts
The consultation document, available here, includes recommendations such as an extra layer of reporting only for the very largest charities. The SORP Committee also recommends a better integration of the narrative report with the accounts. They suggest that more guidance is needed “to help preparers to tell their story, perhaps by providing them with guidance notes, prompts and best practice examples”.
Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said: "The Charities SORP consultation is an incredibly important opportunity for charities to shape the future of reporting in the sector.
"Although there has been a lot of interest in the work of charities, we must make sure that that the SORP is developed with the public interest in mind and does not become a knee-jerk response to media or political pressure.”
In an article in May’s Charity Finance, the joint chairs of the SORP Committee Davies and Anderson outline the feedback they would like as part of the consultation.
