Charity reporting and accounting “must be refocussed with the views and needs of the users of charity reports and accounts at its centre”, a review has concluded.
It comes after a panel was set up to review the current charity reporting and accounting standards, known as the Charities SORP (Statement of Recommended Practice).
Charities established as charitable companies, irrespective of size, and other types of charity with an income of £250,000 or more must follow the SORP.
The final report, published earlier this month, sets out five key recommendations after the committee expressed concerns by a number of weaknesses with the code as it is currently written.
The panel say the recommendations – which cover five main themes – are being made in order to ensure that the way “that charities report on their work and account for their income” under the SORP “can meet new public expectations and are fit for the future”.
The recommendations, as published in the review, are summarised below:
- The needs of the wider public and beneficiaries require a refocusing of the SORP and greater simplification of reporting requirements for smaller charities
- The SORP Committee should be retained but reforms are needed regarding size, composition and clarification of the respective roles of the SORP-making body and SORP Committee.
- Broader and ongoing engagement is needed with a much wider group of stakeholders if the SORP is to continue to be fit for purpose.
- The sector and charity regulators should collaborate to identify and codify best practice in non-statutory financial reporting.
- The SORP-making body, supported by the Financial Reporting Council (FRC) needs to ensure that the redesigned SORP development process takes effect.
- The charity regulators are asked to ensure that SORP process is adequately resourced to implement these recommendations.
Commenting on the review, Charities SORP Committee Governance Review Panel Chair, Professor Gareth Morgan, said: “I am aware of the strengths of the Charities SORP but I have also been aware of concerns expressed by some. Our consultation led to a wide range of really constructive suggestions, and I am confident that if the Panel’s recommendations are implemented the SORP will be considerably more effective in future.”
The Charities SORP Governance Review 2018/19 can be accessed in full here. For help and advice on how these changes may affect your charity, please get in touch with our expert charity finance team.