Consultation on changes to the SORP - Thorne Widgery

The Government has launched a consultation in regards to 21 changes to the Statement of Recommended Practice (SORP), the set of rules that govern charity accounting.

The changes have been proposed following Financial Reporting Council (FRC) amendments to FRS 102 – which the SORP is based on.

Generally, any update to FRS 102 automatically triggers changes to the SORP.

The amendments will apply to all charities in the UK and Republic of Ireland that follow the Charities SORP for reporting periods beginning on or after 1 January 2019.

There are three clarifying amendments in the document. Module 3, which covers accounting standards, policies, concepts and principles, including the adjustment of estimates and errors, has been amended to clarify the requirement for comparative information to be provided for all amounts presented in the financial statements.

In Module 10, which is the balance sheet, a significant amendment is to permit charities that rent investment property to another group entity to measure the investment property at either cost or at fair value.

This module’s amendment would also remove the undue cost or effort exemption for the investment property component of mixed-use property to require measurement at fair value and removes the disclosure of stocks recognised as an expense.

Under Module 13, which covers events after the end of the reporting period, the SORP is amended to clarify when payments by subsidiaries to the charitable parents that qualify for gift aid are adjusting events that occur after the end of the reporting period.

The consultation, which closes on 4 April, has been described as “an important opportunity to help ensure that the Charities SORP continue to provide helpful guidance on charity accounting and reporting”.