Alert - new charity SORP published for comment
The Charity Commission for England and Wales (CCEW) and the Office of the Scottish Charity Regulator (OSCR) have launched a consultation on a new draft Statement of Recommended Practice (SORP) for charities.
Although charity law in Northern Ireland does not currently require charities to follow the charity SORP when preparing their accounts, those charities using the current SORP (2005) will need to understand what will be required by the new one.
CCEW and OSCR, the joint SORP-making body, have developed a draft SORP in partnership with the Charities SORP Committee and are inviting anyone interested to take part in the consultation on the Exposure Draft of the new SORP. The consultation opened on 8 July 2013 and will close on 4 November 2013 (see www.charitysorp.org).
The Charity Commission for Northern Ireland has an observer member on the SORP Committee and sees the SORP as an invaluable contribution to the charity sector, providing sector specific guidance to ensure charities meet requirements in law and accounting standards alike. The charity SORP is recommended best practice for unincorporated charities in Northern Ireland and a must for charities that want to show a ‘true and fair view’ of their financial position and activities.
It provides a comprehensive framework for charity accounts prepared on an accruals basis (also known as SORP accounts) and enables charities to adopt a consistent interpretation of UK Financial Reporting Standards (FRS) as well as account for those transactions that arise when undertaking charitable activities.
The decision to issue a new SORP was not taken lightly. However, new UK financial reporting standards come into effect on 1 January 2015 and changes in accounting standards require a new SORP.
The new Exposure Draft SORP is written in a modular format and is intended to provide greater help to practitioners and charities alike, with a view to making the SORP more accessible for smaller charities. Changes from the current SORP (SORP 2005) include a new look Statement of Financial Activities with investment gains and losses included in the net income/expenditure figure, an explanation of the approach taken to risk management will be required of larger charities in their trustees’ annual report, and there are some changes to accounting policies.
For more information on the consultation, including the new Exposure Draft SORP and how you can take part in the consultation, visit www.charitysorp.org.
Northern Ireland charities
The Department for Social Development is currently developing accounting and reporting regulations for Northern Ireland charities, on which there will be further public consultation.
These regulations are expected to come into operation from 1 January 2015, with the new charities SORP taking effect for financial years beginning on or after 1 January 2015.
Charities that register with the Charity Commission for Northern Ireland before the accounting and reporting regulations come into effect will have to adhere to interim reporting requirements. The interim requirements, which will be the subject of a consultation in the autumn, will last until the new charities SORP takes effect.
The Charity Commission for Northern Ireland is running a joint consultation event on the new draft SORP, as well as the interim requirements, in conjunction with Queen’s University Management School.
The event is being held at Riddel Hall in Belfast on 4 October and more information, including how to book a place, will be available on www.charitycommissionni.org.uk soon.