In July 2014 the joint SORP making committee (being the Charity Commission (CC) and the Office of the Scottish Charity Regulator (OSCR)) issued two new SORPs for charities.
For accounting periods commencing on or after 1 January 2015 due to changes in the UK financial reporting framework (FRSs 100-103) the 2005 version of the SORP will no longer be suitable for purpose and one of the two new SORPs will need to be used for charities that prepare accruals accounts.
Of the two new SORPs, one is based on FRS 102, whilst the other SORP is based on an updated version of the FRSSE (FRSSE 2015). The FRSSE version can only be used by charities which would fall into the category of a small company (even if they are not registered as a company). The FRS 102 version must be used for any charity that does not meet the small company criteria though any charity may choose to apply FRS 102 (and hence adopt the FRS 102 SORP).
However, with an upcoming consultation expected to determine the long term future of the FRSSE in the medium term, this is something to keep an eye on in the coming months once the accounting treatment for small entities has been decided on. The FRSSE 2015 SORP could have a pretty short shelf life.
The introduction of a modular format for the new SORPs appears to have been welcomed by the sector as it means each charity can tailor their own SORP which is part of the 'think small first' project. Both the SORPs (and various helpsheets) are available on a new charity SORP website: http://www.charitysorp.org/.
Some of the headline differences between SORP 2005 and SORP FRS 102 are:
• Some extra disclosures in the Trustees Report to include arrangements for setting pay and remuneration of key management personnel and any benchmarks / criteria used in their setting;• Descriptions of the headings of the SOFA are changing to be in 'plain English';• Income recognition - change the recognition criteria from 'certain' to 'probable'; and• Investment property can now be mixed use.
We will look at some more of the key changes as part of our Changes in Financial Reporting series of free downloads as part of our August Newswire. To subscribe to our monthly newswire click here.