CCAB issues revised SORP for Limited Liability Partnerships

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19 Dec 2021

The Consultative Committee of Accountancy Bodies (CCAB) has published a revised Statement of Recommended Practice (SORP) which sets out a framework for accounting by Limited Liability Partnerships (LLPs) (“LLP 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”. 

Updates have been made to the LLP SORP for:  

  • Changes to the definitions included in the SORP relating to divisions of profit with further consequential amendments throughout the SORP to ensure consistency of terminology.
  • Additional guidance to help determine when an LLP has an unconditional right to avoid delivering cash or other assets to members.
  • Changes to the ordering of the SORP to ensure that the guidance on the division of profits is presented together, reduce duplication, and improve the overall flow of the document.
  • Additional guidance which sets out the basis for alternative classifications of cash flows relating to profit distributions.
  • A requirement for LLPs to disclose their accounting policy for classifying distributions of profits in the cash flow statement and that cash flows be classified consistently from period to period.

The updated SORP is effective for periods commencing on or after 1 January 2022 with early adoption permitted.

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