06/01/2022
SORP developments
When issued, the first set of accounts that will be affected is year-end 31 December 2024.
There are no changes to the Charity SORP to report in this edition of Charity News, but there has been an announcement of the areas that have been agreed will be considered as part of the next update of the SORP. Drafting of the next version of the SORP won’t start until 2023, but this does give an indication of what charities can expect to see.
One of the key issues to be considered is a tiered approach to reporting that could see a reduction in the reporting requirements for smaller charities and allow them to better focus on the information most relevant to them, and could also see reporting thresholds being reconsidered. Other areas being considered can be grouped into four areas:
- Narrative reporting – areas being looked at include summary financial information, an enhanced focus on impact reporting, sustainability reporting to cover topics such as climate change and diversity reporting, and the need for clearer guidance for reporting on charity reserves.
- Income – the issue on whether charities should be permitted to adopt the accrual basis for recognising grant income is being considered, along with the inclusion of donated goods and services in the Statement of Financial Activities and providing greater clarity on the recognition of legacy income.
- Expenditure – the presentation of overheads and support costs is being considered to improve comparability and address the problematic negative perception current disclosure requirements has, as is the poorly understood area of activity reporting.
- Presentation – ways of reducing the length and complexity of the notes to the accounts are being considered, which could include a rethink on the need for detailed comparative information and how to improve clarity on the disclosure of funds, and guidance on materiality to help larger charities present a clearer message is being developed. Those with an interest in the future of charity accounting can keep track of developments from the meeting minutes and supporting papers published by the SORP Committee as they emerge.
Guidance: https://bit.ly/38DSJQh
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