This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Charity Commission and OSCR issue an ‘Update Bulletin’ amending the Charities SORP (FRS 102) as a result of changes to UK Accounting Standards

  • Charity Commission Image
  • UKGAAP Image

04 Feb 2016

The Charity Commission for England and Wales (‘Charity Commission’) and the Office of the Scottish Charity Regulator (OSCR) have published an ‘Update Bulletin’ which amends the Charities SORP (FRS 102) as a result of changes to UK Accounting Standards which are effective for accounting periods beginning on or after 1 January 2016.

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. 

In June 2014, the Financial Reporting Council (FRC) approved two new Charities SORPs for publication; one set out the accounting and reporting requirements of charities in the context of Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“Charities SORP (FRS 102)) and the other was a separate SORP based upon the Financial Reporting Standard for Smaller Entities (FRSSE) (“Charities SORP (FRSSE)).

As a result the UK implementation of the EU Accounting Directive, the FRC, in July 2015, published changes to the existing UK financial reporting framework to take effect for accounting periods beginning on or after 1 January 2016.  As SORPs are required to be updated to comply with changes to accounting Standards, these changes had a direct impact on the Charities SORPS and the Charity Commission and the OSCR have reflected these amendments (included with Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Small entities and other minor amendments) in the Update Bulletin.  These amendments were consulted on in June 2015.

The Update Bulletin amends the Charities SORP (FRS 102), that was issued in July 2014, in the following key areas:

  • The Scope and application module of the Charities SORP (FRS 102) is amended to state that the amendments are effective for accounting periods beginning on or after 1 January 2016 with earlier application permitted for accounting periods beginning on or after 1 January 2015 if not prohibited by regulations, charity or company law.  Should the amendments be adopted early, then the Update Bulletin is clear that all of the amendments must be adopted together in the charity’s trustees’ annual report and accounts.  The amendments also confirm that the Charities SORP (FRSSE) will be withdrawn for such accounting periods and, from 1 January 2016 all charities will be required to follow the Charities SORP (FRS 102).
  • Module 10: Balance sheet and Module 24: Accounting for Groups and the Preparation of Consolidated Accounts have been amended to revise the maximum period over which goodwill and other intangible assets may be amortised in those exceptional cases where an entity in unable to make a reliable estimate of the asset’s useful economic life.
  • Module 12: Impairment of assets has been amended to prohibit the reversal of impairment losses for goodwill.
  • Module 14: Statement of cash flows has been amended to require only those larger charities to prepare a cash flow statement.  
  • Module 17: Charity mergers has been amended to prohibit merger accounting for charities that are companies and enter into a business combination with a third party. 

The Glossary to the Update Bulletin also reflects a revised definition of ‘larger’ charity.  The Charities Act 2011 (Accounts and Audit) Order 2015 increased the charity audit income threshold from £500,000 to £1 million in England and Wales.  Larger charities are required to make more disclosures in the Trustees’ Annual Report.  The Charity Commission and the OSCR have ‘delinked’ the definition of larger charities in Appendix 1: Glossary of Terms in Update Bulletin from the new statutory audit threshold with effect for reporting periods ending on or after 31 March 2015.  This means that ‘larger charities’ are those as defined in Appendix 1: Glossary of Terms in the Update Bulletin (those charities with a gross income of £500,000 (UK) or 500,000 Euros (Republic of Ireland)) rather than as newly defined for statutory audit purposes when preparing the Trustees’ Annual Report. 

As these changes are included within an Update Bulletin to the Charities SORP (FRS 102) rather than reissuing the Charities SORP (FRS 102), charities following the Charities SORP (FRS 102) will have to refer both to the Update Bulletin and the Charities SORP (FRS 102) when preparing their accounts and reports. 

Click for:

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.