No new SORP in 2019, regulator confirms

21 Jul 2017 News

Charity accountants have shelved provisional plans to launch a new version of the charities statement of recommended practice by 2019.

The SORP is the document which governs charity accounting, and interprets the standards laid down by the Financial Reporting Council. It is set by a committee of experts chaired by Nigel Davies, head of accountancy services at the Charity Commission, and Laura Anderson, head of professional advice and intelligence at OSCR, the Scottish charity regulator.

The committee had tentatively planned to launch a new version in order to comply with the Financial Reporting Council’s triennial review of UK-Irish Generally Accepted Accounting Practice (GAAP), which would apply to financial years beginning 1 January 2019. But Davies said yesterday that this is now unlikely.

The FRC has indicated that it will not be making major changes as part of its review, although there are likely to be major amendments at some point. 

The existing SORP will therefore remain in place until the FRC does decide to make major changes, Davies said.

No more support costs

Meanwhile, charities will no longer have to report support costs as a separate category in their annual accounts, if plans discussed by the SORP committee go ahead.

At a committee meeting earlier this year, Davies said the results of a recent research exercise on the future of the SORP had found little enthusiasm for separate accounting of support costs. 

As a result, he and Anderson said their view was that this category should not continue. This judgement was supported by the wider committee.

The original research exercise document had stated: “There is scepticism about the purpose of separating ‘support’ costs – especially as doing so encourages unhelpful comparisons and given that sector practice is inconsistent even though this category has been required since SORP 2005.

“Dropping this category altogether would be a simplification and thereby increase consistency across the sector.”

The committee is also unlikely to proceed with the suggestion that greater specification and guidance could be given on fundraising costs.

Davies said the research found “little evidence to suggest there was a significant demand for this”. 

Any changes recommended by the committee will be subject to a full consultation once the new SORP is drawn up.

 

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