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Changes to new draft SORP on Further and Higher Education following consultation responses

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08 Jan 2014

The technical working party of The Further and Higher Education SORP Board (“the SORP Board”) has proposed some key changes to their original Exposure Draft ("ED") of a revised Statement of Recommended Practice (SORP) which sets out proposals for accounting for further and higher education institutions in the UK. Whilst the majority of the proposals contained within the original ED were supported by respondents, a number of respondents did not support the proposals for recognition of government grants.

The SORP Board published the original ED in August 2013 with a comment period ending in November 2013.  The ED proposed updates to the previous SORP to include the requirements of FRS 100 ‘Application of Financial Reporting Requirements’, FRS 101 ‘Reduced Disclosure Framework’ and FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'; the three main standards that were introduced as a package to replace UK GAAP

The ED did not permit the accrual model to be used for government grants, however many respondents, among other things, commented that this model better reflects the substance of the transaction and the performance model reduces the understandability of the financial statements.  As a result of the feedback, the draft SORP is to be amended to allow an accounting policy choice (as is the case with FRS 102) between using the accrual and performance models for government grants.  

Many respondents also disagreed with the proposals for enhanced remuneration disclosures, however the working party has not proposed any changes to their original proposals, instead they have commented that “this is an issue that regulators should lead on". 

A number of drafting changes to the ED were also proposed which are to be reflected within the draft SORP.    

The revised draft SORP (link to further and higher education SORP website) incorporating these changes, has now been published (15 January 2014), and issued to the Financial Reporting Council (FRC) for approval with the expectation for a final SORP by June 2014. 

Click for further information on the proposed changes and responses (all links to further and higher education SORP website).

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