CCAB publishes revised SORP for Limited Liability Partnerships

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27 Jan, 2017

The Consultative Committee of Accountancy Bodies (CCAB) has published a revised Limited Liability Partnerships (LLPs) Statement of Recommended Practice (SORP).

The Financial Reporting Council (FRC) has approved the CCAB as the recognised SORP-making body for issuing a recognised SORP for LLPs incorporated in Great Britain under the Limited Liability Partnerships Act 2000.  The members of the 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 deal with issues that are specific to LLPs and ensure that, as far as possible, LLPs present financial statements that are comparable with those of other entities”. 

The revisions, consulted on in 2016, update the LLP SORP as a result of amendments made by the FRC to UK accounting standards in July 2015.  These amendments resulted in:

  • The withdrawal of the FRSSE for accounting periods beginning on or after 1 January 2016;
  • Amendments FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland to add a new section (Section 1A Small Entities) outlining presentation and disclosure requirements for small entities and making other changes necessary for continued compliance with company law; and
  • The publication of FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime, a new standard available to entities choosing to apply the micro-entities regime. 

A number of changes have also been made as a result of amendments made to the Limited Liability Partnerships (Accounts and Audit) Regulations 2016 (SI 2016/575) (“The LLP Regulations”) and the consequential amendments to FRS 105 that were issued in May 2016 to align the standard with recent changes to UK company law and make the micro-entities regime available to LLPs and qualifying partnerships.

The CCAB notes that “while these changes (the above amendments made by the FRC and amendments made to the LLP Regulations) do not fundamentally alter the financial reporting regime for LLPs, they allow LLPs – particularly small LLPs – to benefit from a less burdensome financial reporting regime and ensure that the legislative requirements for LLPs are aligned with those applicable to limited companies”.

The revised SORP is applicable for LLPs that report under FRS 102.  It does not apply to LLPs complying with International Financial Reporting Standards (IFRSs), FRS 101 Reduced Disclosure Framework or FRS 105.  LLPs qualifying for and choosing to apply the micro-entities regime should apply the requirements of FRS 105.  Those small LLPs applying Section 1A of FRS 102 will need to comply with the recognition and measurement requirements of FRS 102 and the requirements of the revised SORP. 

The revised SORP is effective for accounting periods beginning on or after 1 January 2016.  However earlier adoption will be permitted for accounting periods beginning on or after 1 January 2015 provided that the LLP Regulations are applied from the same date.

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