New SORP charity guidance - Thorne Widgery

The body responsible for SORP (Statement of Recommended Practice) has issued new guidance to charities to help them manage their financial reporting in light of the latest measures to prevent the spread of COVID-19.

The new Charity SORP guidance looks at the implications for the trustees’ annual report, going concern and the alternative basis to going concern when preparing accounts.

The SORP committee in its guidance has warned that the measures being taken to contain COVID-19 will impact on charities in many different ways and it is important for charity trustees to understand the impact on the delivery of their activities and their governance, including their finances.

The Charity Commission has already put out separate guidance on charity governance, which reflects the same sentiment as the SORP update.

Financial reporting

Charity accounts currently being prepared, but that are yet to be approved, should include an explanation of the impact of the COVID-19 pandemic on the charity and its finances. Trustees may also need to make changes to the financial statements as a result of the current situation.

Trustees need to understand and discuss the current impact on their organisation, while also adapting to developing guidance from charity regulators.

Areas that the SORP committee believe are worth particular consideration are:

  • reporting the main achievements of the charity;
  • explaining how the charity’s activities have been affected by virus control measures;
  • outlining financial uncertainties regarding the charity’s financial sustainability; and
  • consideration of going concern.

The reporting should also explain how the charity has managed its change of circumstances, and the impact the pandemic has had on the charity’s ability to fundraise and how this is being dealt with.

Charity Income 

The social disruption caused by the Government’s ‘Stay at Home’ guidance will have an impact on:

  • the delivery of and demand for the activities of charities;
  • the availability of staff for work;
  • levels of illness across society which will affect the beneficiaries of charities; and
  • fundraising activities.

Each of these factors, and others, will have implications on a charity’s income, expenditure and commitments, and the value of assets and liabilities.

In some cases, the implications may be so severe as to cast doubt upon a charity’s solvency. It is important that this is reported to SORP

Staff, volunteers and service users

The guidance also offers specific advice on reporting how the outbreak has affected staff members, volunteers and service users/beneficiaries.

It asks that trustees consider and report on the implications for the charity’s operations and activities for the coming year, the impact on the principal risks and uncertainties facing the charity during the reporting period, as well as existing or potential defined benefit pension liabilities for members of staff.

Going concern

If accounts cannot be prepared on a going concern basis then this should be disclosed and consideration given to the effect on the accounting policies.

The body has re-iterated that the decision to wind up a charity is not a pre-requisite for not preparing accounts on a going concern basis.

A disagreement between trustees and their auditors is also not a valid reason for non-submission of a charity’s accounts, according to the guidance.

To decide whether the accounts are prepared on a going concern basis, trustees should make judgments as to the future financial circumstances facing their organisation.


Although the new guidance is helpful, the body has made it clear that its latest advice does not constitute an amendment to the existing SORP rules and trustees and their auditors are under no obligation to follow any of its recommendations.

A full copy of the guidance can be found here for further clarity.

If you are unsure of your SORP reporting requirements during this uncertain period or require help with them it is advised that you seek professional support from a specialist accountant