Charities SORP (FRS102) Update Bulletin 2

The Statement of Recommended Practice for Charity Accounting (‘the SORP’) sets out the reporting framework that charities preparing accounts on the accruals basis are required to follow. Issued in 2014, it is subject to frequent updates to ensure that it remains up to date.

The most recent update to the SORP, Update Bulletin 2, was issued over a year ago. Its impact is only now being felt as charities start to prepare their 2019 accounts.

The Bulletin contains a number of ‘clarifying amendments’ that take effect for accounting periods commencing on or after 5 October 2018. These provide guidance on how the existing requirements of the SORP should be interpreted in the areas of comparative information, the depreciation of fixed assets and the payment of Gift Aid by a subsidiary trading company to its charitable parent. On this last issue a separate Information Sheet has also been published providing guidance on the accounting by subsidiary companies in respect of Gift Aid payments.

There are also a number of changes introduced that take effect for accounting periods commencing on or after 1 January 2019 that are designed to ensure that the SORP remains consistent with the requirements of FRS102, the Financial Reporting Standard on which the SORP is based. The most significant of these relate to investment property, charitable mergers and the statement of cash flows. Although these are the most significant, other less significant changes are likely to impact a limited number of charities.