For some years with
minor variations, Charity accounting has been governed by the Statement of
Recommended Practice (SORP) for Charities, March 2005.
Since that time of
course we have had the new Charities Act 2011 and change has been expected.
business world is now preparing for FRS102 Financial Reporting Standard which
comes into force in 2015. It applies to
large and medium sized organisations with what is termed the Financial
Reporting Standard for Small Entities (FRSSE) still applying to small
companies. Most charities prepare their accounts under the FRSSE.
January 2015 we will have a new Charity SORP, or actually two new SORPS. There will be one SORP for charities
preparing their accounts under FRS102 and another new SORP for charities
preparing them under the FRSSE.
The problem is that
the FRSSE is now going to be withdrawn at the end of 2015, so small
organisations will then be required to also prepare their accounts under
FRS102, except with some disclosure exemptions.
This therefore raises
the question as to which SORP charities should adopt for their accounting
periods beginning on or after 1 January 2015. They could use the FRSSE SORP,
which would require fewer adjustments from their current accounts but is only
valid for a year, or move straight over to the FRS102 SORP, even though the
section in it requiring fewer disclosures for smaller organisations has not yet
Charities with two of
the following – income over £6.5m, gross assets over £3.26m or 50 employees or
more – will not have the option to use the FRSSE SORP.
At Caladine we
appreciate that each Charity is different and we will obviously guide you in
the correct pathway as to which SORP to adopt.
I have written a
separate technical memo, comparing the difference between the SORP FRSSE and
the SORP FRS102 which may be of interest.