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FRC issues revised SORP ‘Policy and Code of Practice’

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02 Aug 2013

The Financial Reporting Council (FRC) has issued a revised version of its ‘Policy and Code of Practice’ on Statements of Recommended Practice (SORPS). The revised version is effective from 1 August 2013 and supersedes the earlier version issued by the Accounting Standards Board in July 2000.

SORPS, issued by ‘SORP-making bodies’ are intended to supplement accounting standards and other legal and regulatory requirements to reflect transactions or circumstances that are unique within specialised industries or sectors.  

The SORP ‘Policy and Code of Practice’ (link to FRC website) provides the policy which industry or sectoral bodies must follow if they are to become a recognised ‘SORP-making’ body.  The SORP ‘Policy and Code of Practice’ also contains a Code of Practice for such bodies on developing SORPS.

The revisions do not alter the overall policy in relation to SORPS but have been made to reflect “FRC reform and experience of applying the previous version”.  The FRC has been working with SORP-making bodies in updating their SORPS to reflect the requirements of FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. 

The FRC has also provided some guidance on the early application of FRS 102 for entities within the scope of a SORP.  Paragraph 1.14 of FRS 102 permits early application, where an entity is within the scope of a SORP when “it does not conflict with the requirements of a current SORP or legal requirements for the preparation of financial statements”.  The FRC notes that current SORPS, as they are currently written, may not conflict with FRS 102 and so careful consideration is required to determine whether there is a conflict prior to them being updated to reflect FRS 102.  They note that “in particular an entity should consider whether or not the recognition and measurement requirements of FRS 102 are consistent with the current SORP”.  Nevertheless, the FRC emphasise that legal or regulatory requirements will still need to be considered to determine whether early application is permitted. 

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