Overview
Statements of Recommended Practice ("SORPs") are developed in the public interest and set out current best accounting practice. SORPS, issued by ‘SORP-making bodies’ are intended to supplement accounting standards and other legal and regulatory requirements to reflect transactions or circumstances that are unique within specialised industries or sectors. SORPs are issued on subjects on which it is not considered appropriate to issue an accounting standard at the time.
SORPs cannot be taken as authority to depart from the requirements imposed by accounting standards, nor to extend the scope of accounting standards to include entities or circumstances which are otherwise excluded from specific accounting standards or accounting standards in general.
The SORP ‘Policy and Code of Practice’ (link to FRC website) provides the policy which industry or sectoral bodies must follow if they are to become a recognised ‘SORP-making’ body. The SORP ‘Policy and Code of Practice’ also contains a Code of Practice for such bodies on developing SORPS.
Scope
SORPs exist for a range of specific entities and industries. More detail is given below. If a type of entity falls within the scope of a SORP, its financial statements should be prepared in accordance with existing UK GAAP or FRS 102, as relevant, and that SORP.
Summary
The FRC has been working with SORP-making bodies in updating their SORPS to reflect the requirements of FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.
The following SORPS have been updated for FRS 102 and have been issued by their respective SORP-making body and are all effective for accounting periods beginning on or after 1 January 2015 (unless otherwise stated):
* In February 2016 the Charity Commission for England and Wales (‘Charity Commission’) and the Office of the Scottish Charity Regulator (OSCR) 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. 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).
~ In May 2016 the Charity Commission and the OSCR began a consultation exercise to seek views on how the Charities SORP FRS 102 can be improved.
$ In February 2018 the Charity Commission for England and Wales (‘Charity Commission’) and the Office of the Scottish Charity Regulator (OSCR) have issued a joint consultation on proposed amendments to the Charities Statement of Recommended Practice (FRS 102) (‘Charities SORP FRS 102) following amendments to UK accounting standards in December 2017 which formed part of the 2017 Triennial review of the standard by the Financial Reporting Council (FRC). The consultation closed on 4 April 2018.
^ In November 2018 the Charity Commission for England and Wales (‘Charity Commission’) and the Office of the Scottish Charity Regulator (OSCR) published a further ‘Update Bulletin’ which amends the Charities SORP (FRS 102) as a result of amendments to UK accounting standards in December 2017 which formed part of the 2017 Triennial review of the standard by the Financial Reporting Council (FRC).
% In December 2021, the Consultative Committee of Accountancy Bodies (CCAB) published a revised LLP SORP effective for accounting periods beginning on or after 1 January 2022. The above SORP is still relevant until that point of adoption.
# In September 2018 the Further and Higher Education SORP Board (the SORP Board) published a revised Statement of Recommended Practice (SORP) setting out proposals for accounting for further and higher education institutions in the UK. The amended SORP is effective for financial periods beginning on or after 1 January 2019. Early adoption is permitted if the accounts direction of the relevant regulator permits it. The above SORP is still relevant until that point of adoption.
*** In October 2018 the National Housing Federation published a revised Standard of Recommended Practice (SORP) to reflect FRS 102 amendments. The updated SORP will be effective for periods beginning on or after 1 January 2019. Early adoption is permitted provided all aspects are adopted.
