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Charities: have you chosen which SORP to follow?

Calculator Red & Black - Image Credit Free Range Stock - Ian LThe Charity Commission has published two new SORPs, which take effect for financial years beginning 1 January 2015, and issued two worked examples. All charities and charitable companies preparing their accounts on an accruals basis must choose which SORP to follow.

The examples, which follow the new accounting standard FRS 102 and the Charities SORP (FRS 102) are available as free downloads from the micro-site, along with additional information.

Charities will have to choose between Financial Reporting Standard for Smaller Entities (FRSSE) or the Financial Reporting Standard applicable in the UK (FRS 102). Due to the differences between the FRSSE and FRS 102 a SORP has been developed to provide application guidance for each accounting standard.

Whilst most charities will be able to use the FRSSE standard, they need to be aware that it is due to be reviewed by 2016 and a change in the FRSSE will require a change in the FRSSE SORP. Therefore, charities adopting the FRSSE may face changing their accounting policies twice in succession.

Charities may use the FRSSE if they meet 2 of the following 3 criteria:

  • Gross income not exceeding £6.5m (8.8m euro)
  • Total assets not exceeding £3.26m (4.4m euro)
  • Employs no more than 50 staff

FRS 102 may be followed by any charity. Charities following FRS 102 are often required to provide more information in the notes to the accounts and must provide a Statement of Cash-flows irrespective of their level of income.
Charity clients will be contacted when their accounts are due to confirm which SORP they wish to follow.


 

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