SORPs issued by the Charity Commission and OSCR apply to charities preparing accounts under UK GAAP to present a ‘true and fair view’ and are intended to supplement accounting standards and other legal and regulatory requirements to reflect transactions or circumstances that are unique within the charities sector. 

The SORPs set out the required accounting and reporting by charities in the context of the new accounting framework introduced by Financial Reporting Standard (FRS) 102 applicable in the UK and Republic of Ireland for financial years beginning on or after 1 January 2015.  One SORP is targeted at those charities that adopt FRS 102 (“the FRS 102 SORP”) and the other is targeted at those charities that, depending on their size, can choose to adopt the Financial Reporting Standard for Smaller Entities (FRSSE) (“the FRSSE SORP”).  Each SORP reflects the different accounting treatments under the two standards.  Both SORPS are effective from financial years beginning on or after 1 January 2015 and have been developed after reflecting on feedback received on the original Exposure Draft issued in July 2013.

The SORPs have been created in a modular format containing a set of core ‘modules’ which apply to all charities and also a number of additional modules which will only apply to specific charities.  The Charity Commission and the OSCR have highlighted that charities will be able to customise the SORP according to their specific circumstances through an interactive website.  It is hoped that this modular format will help to better meet the needs of the preparers of charity accounts especially for smaller charities. 

Alongside the publication of the SORPs the Charity Commission and the OSCR have published guidance to help charities choose the right SORP to adopt.  Help sheets have been created that explain the main differences between the FRS 102 SORP and the FRSSE SORP and the criteria that must be met to be able to adopt the FRSSE SORP.  An indication is provided that the FRSSE standard is due to be reviewed in 2016 in light of the new EU Accounting Directive and this may mean that charities adopting the FRSSE now will have to change their accounting policies twice in succession due to the amendments. 

The Charity Commission and the OSCR emphasise that “it is important to make the right choice” of accounting framework to adopt and advise that charities speak to their auditor, independent examiner or advising accounting to assist in choosing the standard that is best.  They comment that “although the two SORPS have the same structure and order of modules, the requirements differ significantly due to underlying differences in terminology, accounting policies and disclosures required by the FRSSE and FRS 102”.

Click for:

• Press release (link to the Charity Commission website).
• Guidance on choosing the right SORP and the development of the SORPS (link to Charity Commission SORP micro-site)
• FRS 102 SORP (link to Charity Commission SORP micro-site)
• FRSSE SORP (link to Charity Commission SORP micro-site)
• Our previous UK Accounting Plus news item on the draft Charities SORP.