INTRODUCTION
NICVA (the Northern Ireland Council for Voluntary Action) welcomes the opportunity to respond to the Charities SORP-making body’s consultation paper on The Exposure Draft Statement of Recommended Practice 2026: Accounting and Reporting by Charities (the Exposure Draft SORP).
NICVA is the umbrella representative organisation for the voluntary and community sector in Northern Ireland with a membership of over 1,400 organisations.
NICVA’s response is based on its role as the representative body for the voluntary and community sector in Northern Ireland. Comments are based on NICVA’s participation in the SORP-making body’s engagement strands as well as the roundtable seminar held in NICVA on 8 May 2025 giving a high-level overview of the proposed new changes.
About the Charities SORP (Statement of Recommended Practice)
In this consultation, the SORP-making body is calling for comments on amendments it has made to the Charities SORP following the Financial Reporting Council’s revisions to FRS 102 -UK and Ireland Accounting Standards and a wider SORP review and update.
The SORP-making body states reminds us that one of the principal roles of the Charities SORP “is to provide charity specific guidance on applying UK-Irish accounting standards when preparing a charity’s accounts. When changes are made to relevant accounting standards these need to be reflected in the SORP. In preparing the Exposure Draft SORP work has also been undertaken to improve the clarity and explanation the SORP offers and to advance charity reporting.”
General comments
NICVA welcomes this consultation on the Exposure Draft SORP as it has been quite a lengthy process to get to this stage, work began in 2020.
Whilst the Exposure Draft SORP is very detailed on all aspects of the new Charities SORP, NICVA Is only commenting broadly on certain aspects of the consultation - Sections 1, 2, 9 and 10 – as we appreciate that those who have specialist knowledge in the preparation of accruals accounts are best placed to comment on technical aspects of the new accounting framework.
Consultation questions - Sections 1, 2, 9 and 10
Section 1 Tiered reporting
The Exposure Draft SORP retains the existing modular format and contains core modules that are relevant to all charities and specialist modules that only apply to particular charities according to their constitution, structure and activities. Each module has an introduction which explains what the module is about and details the requirements for charities in each tier of the proposed new structure.
The Exposure Draft proposes a new three-tiered reporting structure, based on gross income, with the aim of alleviating the reporting burden on smaller charities:
Tier 1 - charities with gross income of not more than £500,000
Tier 2 - charities with gross income above Tier 1 threshold but not more than £15m
Tier 3 – charities above the tier 2 threshold
The scope and application module of the Exposure Draft SORP sets out a summary of the tiers, which modules have different requirements for some tiers and which modules are applicable to all tiers.
Question 1: Do you support the move to three tiers? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so:
Compared with the current structure, the move to tiers is very helpful in knowing exactly what is required within a given tier. This should help Trustees navigating the guidance and framework.
NICVA would have liked to see a fourth tier for micro charities. In N.Ireland we still don't have the CIO structure available for charities, so any charity that wants the benefits of incorporation has to incorporate as a company ltd by guarantee which then requires them to prepare accrual accounts which comply with the Charities SORP. This is a considerable amount of work for a small charity that could otherwise be entitled to prepare receipts and payments accounts if it were a CIO.
Question 2: Do you consider that the proposed thresholds have been set at an appropriate monetary level in order to support a proportionate approach to reporting? *
Yes No X No opinion
Please provide any reasons for your answer here, if you wish to do so:
There is a significant range of income in Tier 2, from £500,000 to £15million. A charity operating with an annual gross income of £640,000 would be expected to adhere to the same requirements as a charity of £14m income. This is too wide a range.
NICVA believes that the income threshold in Tier 1 should be increased. The monetary levels in the Tiers need to take account of current inflation as well as other consultations and proposals to raise the thresholds for auditing and independent examination, such as that happening in England and Wales.
Question 3: Do you agree that the Exposure Draft SORP clearly sets out the proposed reporting requirements for each tier? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so:
The Exposure Draft SORP clearly sets out the proposed reporting requirements for each tier which is very helpful. You can see very easily from the breakdown in the tiers what is required. This is especially helpful for those smaller charities in Tier 1, that they can just read the tier 1 sections clearly otherwise it could be very overwhelming if the Tier requirements were not separated out so clearly.
Question 4: Do you agree that charities within the largest income threshold should be referred to as 'tier 3' charities, or should they be referred to as 'tier 1' charities? *
- Agree with tier 3 X
- Disagree – should be referred as tier 1
- No opinion
Please provide any reasons for your answer here, if you wish to do so: (250 word limit applies)
Tier 1 implies starting at the bottom or the first stage. The approach of the Tiering in the Exposure Draft makes sense, that is, all charities much complete Tier 1 and then larger charities must go through all the Tiers, like a bolt-on to basic information that everyone must supply. This is similar to the reporting of AMR to the Charity Commission.
Question 5: Do you have any additional comments in relation to the proposed tiered reporting structure in the Exposure Draft SORP?
The tiered approach is welcome and should help charities navigate to the sections that apply only to them however the income bands do not appear to have taken account of inflation.
Section 2 Module 1 - Trustees’ Annual Report
The module has been redesigned to help users of the SORP to understand the requirements that apply to them and to encourage charity trustees to tell their story. Although the requirements are driven by charity regulations, consideration has been given to the relevance of the requirements for each tier. Some requirements that apply to larger charities in the extant SORP have been extended to charities in all tiers.
All charities exist to provide public benefit. It follows that they should be able to explain the benefit provided to the beneficiaries that the charity exists to serve and support. To facilitate this, module 1 includes prompt questions for charity trustees to consider and answer, to help them develop their Trustees’ Annual Report.
Question 6: Do you agree that including prompt questions will help trustees to develop their Trustees’ Annual Report? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so:
Prompt questions should be very useful in the TAR especially for those charities that are complying to the SORP for the first time. It should be emphasized that the prompt questions are just the basis and that charities can include other information and photos also to bring the report to life.
Charities could use the prompt questions in this section of the SORP to help them set out the governance work of the charity for the year ahead, building in monitoring and reporting on them throughout the year.
Impact reporting
The engagement strands strongly recommended that charities report on the difference they are making in the SORP 2026. Consequently, the Exposure Draft SORP proposes that charities in all tiers must explain how their work has benefited society as a whole. Charities in tiers 2 and 3 must provide more detail on impact reporting.
Question 7: Do you consider the requirements for impact reporting for each tier to be proportionate? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so
Some participants at our consultation seminar were concerned about the extra burden being put on charities to provide more detail in their TAR especially those small and smaller/medium sized charities.
We know from helping charities through the registration process that some found answering the public benefit question difficult. For some the benefit that is being achieved by their beneficiaries is so obvious that they find it hard to articulate.
NICVA has been working for some years in providing training to charities on impact reporting. Sometimes having a framework with questions can help the charity to articulate the difference it is making to its beneficiaries but this needs to be balanced with asking for too much detail.
NICVA will continue to provide training on impact reporting as it helps charities articulate the great work they are doing.
Sustainability reporting
Stakeholders are increasingly interested in how charities respond to environmental, governance and social issues. To reflect this and to advance reporting in this area, in a proportionate manner, the Exposure Draft SORP proposes that charities in tiers 1 and 2 are now encouraged to explain how they are responding to and managing environmental, governance and social matters. It is proposed that charities within tier 3 must explain how they are responding to and managing all of these matters.
Question 8: Do you consider the requirements for sustainability reporting for each tier to be proportionate? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so:
We welcome the inclusion of sustainability reporting for Tier 3 charities as a requirement. Charities in Tiers 1 and 2 could then learn from the work that Tier 3 charities are working to implement. At our consultation seminar, there was some discussion about greenwashing and box ticking. NICVA believes that charities in Tier 3 could be constructively challenged from stakeholders about the relevance/merits of the statements in the reports which could be a very positive thing in terms of implementing changes.
Some funders are taking an interest in this area and asking charities for their policies on environmental sustainability, so it isn’t something new.
Volunteers
The extant SORP requires all charities to disclose in the notes to the accounts a description of the role played by general volunteers (Module 6, Donated goods, facilities and services, including volunteers). Some of the disclosure requirements have been relocated from Module 6 in the Exposure Draft SORP and instead included in the requirements for all charities in the Trustees’ Annual Report. In addition, the Exposure Draft SORP extends the existing requirement in the extant SORP for larger charities to provide a narrative explanation of the scale and nature of activities undertaken by volunteers to charities in all tiers. Module 6 still requires the notes to the accounts to include information about the contribution of unpaid general volunteers.
The Exposure Draft proposes that charities in tiers 2 and 3 should provide information on the number of volunteers and where practicable, the contribution of volunteers may be expressed in terms of full-time equivalent hours. These disclosures are considered helpful in telling the charity’s story, whilst addressing the difficulty of producing financial information on volunteers and/or obtaining a reliable measurement of volunteer time for recognition in the financial statements. The SORP-making body believes that as this kind of information is provided as part of the annual return process to each charity regulator, that there would be minimal cost associated with including this information.
To support your understanding of the proposed changes and to help you respond to the next question you should also refer to module 6 of the Exposure Draft SORP 2026.
Question 9: Do you consider the disclosures for volunteers to be proportionate?
Yes No No opinion X
Please provide any reasons for your answer here, if you wish to do so:
NICVA believes this question is best answered by those charities that are able to calculate the monetary value of volunteers and to those that have specialist knowledge in the preparation of accruals accounts.
Reserves
Charity reserves are an area of interest for stakeholders but one which is sometimes misunderstood by charity trustees. This area was one of the topics identified by engagement strands to be considered in the development of the SORP 2026. The SORP Committee agreed that improvements needed to be made to how reserves are defined in the SORP and how the disclosure requirements are explained. The Exposure Draft SORP proposes an updated definition of reserves in the glossary and more clarity about the relevant disclosure requirements for the Trustees’ Annual Report.
To support your understanding of the proposed changes and to help you respond to the next question you should also refer to Appendix 1 - Glossary of the Exposure Draft SORP 2026.
Question 10: Do you consider the explanation of reserves in the glossary helpful? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so:
The setting of reserves and understanding of what is meant by reserves can sometimes be daunting for trustees. The explanation of reserves is clear however
It would be helpful if a link was provided to guidance on developing a reserves policy. The requirements in the new SORP require that the charity actually looks at what it has in reserve and what it policy says. This should help the Trustees to have a meaningful discussion about the reserves.
The Exposure Draft SORP also seeks to address the apparent isolation of the reserves figure in the Trustees’ Annual Report from figures in the statements of account and from the consideration of going concern. The Exposure Draft SORP proposes to require charities in all tiers to provide a reconciliation of the reserves figure in the Trustees’ Annual Report to the accounts where these figures are inconsistent with one another. Where a charity has no reserves, it must explain how it is operating as a going concern.
Question 11: Do you consider the disclosures for reserves are proportionate? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so:
Should be proportionate.
Plans for the future
In the extant SORP, larger charities must provide a summary of their plans for the future. The Exposure Draft SORP proposes to extend this requirement to charities in all tiers. Our view is that charities in all tiers must consider future plans when assessing whether they are operating as a going concern. Therefore, it would not increase the reporting burden for smaller charities to provide this information.
Question 12: Do you consider the requirement for tier 1 charities to provide a summary of their plans for the future is proportionate? *
Yes X No No opinion
Please provide any reasons for your answer here, if you wish to do so
Some smaller charities don’t have strategic plans and go from year to year, reacting and delivering. This requirement may be helpful in forcing smaller charities to start discussing future plans and hopefully it may help some instigate developing plans.
Legacies
The Exposure Draft SORP proposes a new requirement for tier 2 and tier 3 charities, to provide a narrative explanation of how legacies are included in the accounts. This is to help users of the accounts to understand that a legacy may be recognised as income before the resources are received. The difficulty regarding recognition of legacies in charity accounts arose in discussions with engagement strands and the proposal aims to help address this issue.
Question 13: Do you consider that the additional disclosure will help to explain the treatment of legacies in the accounts? *
Yes No No opinion x
Please provide any reasons for your answer here, if you wish to do so:
NICVA believes this question is best answered by those charities that have experience of legacy income and to those that have specialist knowledge in the preparation of accruals accounts.
Question 14: Do you have any other comments on module 1 and the proposals for the Trustees’ Annual Report?
No
Section 9 - Smaller charities
Question 40: Do you agree that the drafting, structure and proposals in the Exposure Draft SORP support the needs of smaller charities whilst addressing the needs of users of charity reports and accounts? *
Yes No X No opinion
Please provide any reasons for your answer here, if you wish to do so:
It looks reasonable however we would still be concerned that very small charities would find the reporting framework overwhelming. It could put off small charities from incorporating because of the accounting and reporting requirements on the accruals accounts.
Section 10 - Other comments
Question 42: Do you have any other comments on the Exposure Draft SORP?
At NICVA’s roundtable seminar, participants believed that the SORP-making body should provide a template set of accounts which comply with the new SORP. NICVA agrees and believes that there should be 3 sets of template accounts, one for each Tier which demonstrates the requirements in the new SORP.
