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We comment on new draft SORP for charity accounting and reporting.

  • Charities SORP Consultation Nov 13 Image

04 Nov 2013

We have published our comment letter on the Charity Commission for England and Wales and the Office of the Scottish Charity Regulator Exposure Draft on a new Statement of Recommended Practice for charity accounting and reporting (“the Charity SORP”). We support the proposed revisions contained within the Charity SORP but also highlight a number of ways in which it can be improved.

Our key comments include: 

  • We believe that there are a number of ways in which the SORP could be made more useful to smaller charities.  One suggestion is to identify clearly the source of each requirement in the SORP so that it is clear whether the requirement applies to entities that apply the Financial Reporting Standard for Smaller Entities (FRSSE).
  • We make a number of suggestions to improve the SORP microsite including the possibility of generating a version of the SORP which contains material only relevant for FRSSE or Companies Act entities and there be an option to obtain only the disclosure requirements of the SORP.
  • Consideration should be given as to how the structure and content of the trustees’ annual report will interact with the new strategic report that will be required for large and medium-sized charitable companies for periods ending on or after 30 September 2013.
  • We believe that more guidance is required in the areas of:
    • preparation of a parent charity Statement of Financial Activities where group financial statements are prepared;
    • donated goods and the retail Gift Aid Scheme; and
    • requirements of FRS 102 not covered by the SORP.
  • We believe that there is no need to expand the disclosure requirements to require larger charities to disclose the job title and remuneration of their highest paid employee as this will already be dealt with in the bandings of staff salaries.
  • We believe that charities should be able to take advantage of the disclosure exemptions permitted for parent and subsidiary charities by Financial Reporting Standard (FRS) 102, in particular the exemption from preparing multiple cash flow statements. 

A number of further improvements are highlighted in our comment letter such as aligning the terminology used within the SORP to that used within FRS 102, recommending an explicit reference to the FRC guidance on going concern within the SORP and clarifying that the definition of related parties for charities is wider than that contained within FRS 102. 

Further comments and full response to all questions raised in the invitation to comment are contained within the full comment letter.

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