Comments invited on new draft SORP for Limited Liability Partnerships

  • UKGAAP Image

11 Oct, 2013

The Consultative Committee of Accountancy Bodies (CCAB) has published an Exposure Draft on a new Statement of Recommended Practice (SORP) which sets out a new framework for accounting by Limited Liability Partnerships (LLPs) (“LLP SORP”). Comments are invited until 10 January 2014.

The Financial Reporting Council (FRC) has approved CCAB as the recognised SORP-making body for issuing a recognised SORP for Limited Liability Partnerships incorporated in Great Britain under the Limited Liability Partnerships Act 2000.  The members of CCAB are; The Institute of Chartered Accountants in England and Wales (ICAEW), The Institute of Chartered Accountants of Scotland (ICAS), The Institute of Chartered Accountants in Ireland (ICAI), The Association of Chartered Certified Accountants (ACCA) and The Chartered Institute of Public Finance and Accountancy (CIPFA).  

SORPS issued by CCAB apply to LLPs preparing accounts under UK GAAP to present a ‘true and fair view’.  CCAB has stated that “the underlying purpose of the SORP is to ensure that, as far as possible, LLPs present financial statements that are comparable with those of limited companies”. 

The Exposure Draft of the LLP SORP proposes updates to the previous SORP (2010) to reflect the requirements of FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. 

The changes proposed as a result of FRS 102 are: 

Updating the guidance on business combinations and group accounts to reflect the fact that FRS 102 only allows merger accounting to be used for group reconstructions.

Updating the guidance on contractual or constructive obligations and annuities to reflect the fact that FRS 102’s requirements relating to financial liabilities differ from current UK GAAP requirements.

Updating references throughout to reflect the introduction of the option to produce a single statement of comprehensive income, including adding an additional exhibit in appendix 1. 

A number of other changes have been proposed to clarify areas of the 2010 SORP “where there were known issues or misunderstandings”: 

Clarifying that if a reconciliation of members’ interests is to be shown as a primary statement in place of the statement of changes in equity then comparatives must be shown for all figures presented.

Improving the table that follows paragraph 60 to ensure the recommended format not only provides a reconciliation of members’ interests but also meets related Companies Act requirements.

Providing more guidance on cash flow statement presentation to reduce divergent practices.

Refining the examples in appendix 2 to focus on more commonly encountered scenarios and to eliminate some duplication. 

The final SORP will be effective for accounting periods beginning on or after 1 January 2015 and earlier, if an entity chooses to early adopt FRS 102. 

Click for (all links to CCAB website):

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.