New Charity Accounting Framework Published
Two new Statements of Recommended Practice (SORP) have been published recently by the relevant UK bodies. One supports the Financial Reporting Standard for Smaller Entities (FRSSE) and the other the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).
What are SORPs for?
The new SORPs provide a comprehensive framework for charity accounting. All charities, who prepare accounts under the accrual basis of accounting, must follow them. They apply to financial years beginning on or after 1 January 2015.
The charity SORPs are applicable in the UK but Irish charities can refer to them as best practice documents.
Due to the accounting changes in new Financial Reporting Standard (FRS102), issued by the Financial Reporting Council last year, new SORPs were required.
What do the new SORPs provide?
The new SORPs provide a framework supporting each of the accounting standards (FRSSE or FRS 102). Charities can choose from either of them, depending on their size. For more information visit www.charitysorp.org
A Charities SORP provides recommendations for accounting and reporting. They explain how accounting standards should be applied and how to account for charity specific transactions. They aim to provide consistent accounting methods and ensure that all accounts prepared give a ‘true and fair’ view.
Each SORP is subject to approval by the Financial Reporting Council (FRC). Once they are approved they will form part of UK-Irish Generally Accepted Accounting Practice (GAAP).
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