On May 22, the Financial Reporting Council (FRC) approved the new Charities Statements of Recommended Practice (SORP) for publication. The FRC are required to review the Charities SORPs to ensure that:
they have been prepared in accordance with the FRC’s Policy and Code of Practice on SORPs
they do not appear to contain fundamental points of principle that are unacceptable in the context of current practice or to conflict with an accounting standard
The FRC Board considered and approved the SORP for the new Financial Reporting Standard (FRS 102) and the SORP for Financial Reporting Standard for Smaller Entities (FRSSE).1 The two SORPs are necessary to support charities implementing the new UK Generally Accepted Accounting Practice which takes effect for financial years beginning on or after 1 January 2015.
Sam Younger, CEO CCEW and Joint Chair of the SORP Committee said:
The FRC’s approval is a culmination of many years work; we and OSCR as the SORP-making body are especially grateful to the members of the SORP committee for their commitment and attention to detail. The result is a high quality accounting and reporting framework for charities.
Laura Anderson, Head of Enforcement at OSCR and Joint Chair of the SORP Committee said:
The FRC have acknowledged the wide-ranging and exemplary consultation exercise undertaken in developing the new SORP framework. Of course any change is a challenge to the sector but these high quality SORPs should equip the sector to make the transfer to new GAAP in 2015.
The SORP-making body anticipates publishing the new SORPs on the dedicated micro-site in the summer and possibly as early as July.
The Commission’s mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
charities know what they have to do
the public know what charities do
charities are held to account
The Office of the Scottish Charity Regulator (OSCR) is the independent regulator and registrar of Scotland’s 23,500 charities and publishes the Scottish Charity Register at www.oscr.org.uk. Our vision is for charities in which the public has confidence and which provide public benefit.
The Commission and OSCR together form the joint SORP-making body for charities and is authorised by the Financial Reporting Council for the purpose of developing and issuing the Charities SORP.
The SORP Committee is a sector-based expert committee that advises the joint SORP-making body in its development of the SORP. The Committee includes charity finance directors, charity auditors as well as members reflecting broader charity sector and academic interests.
Charities can choose which SORP to follow depending on which accounting standard they use. In order to use the FRSSE, charities must meet two out of three of the following criteria: an annual income of less than £6.5million; total assets of less than £3.26million; or fewer than 50 employees.