New SORPs for LLPs and Charities

The LLP SORP 2010 and the Charities SORP 2005 have been updated for the changes to UK GAAP brought about by FRS 102 and FRSSE 2015.


The LLP SORP was issued on 14 July 2014, and is effective for periods beginning on or after 1 January 2015, though early adoption is permitted. The new SORP no longer uses the old references to UK GAAP, but instead uses the terminology of FRS 102.

When the new SORP sets out what should be included in a set of financial statements, it advises that ‘in certain circumstances, paragraph 3.18 of FRS 102 allows entities to present a single statement of income and retained earnings in place of the statement of comprehensive income and statement of changes in equity. However, this SORP does not recommend this approach for LLPs as it will be of little benefit to users of LLP financial statements in most cases.’

The SORP applies to LLPs incorporated in the United Kingdom that report under FRS 102 or the FRSSE, effective January 2015. It does not seek to set out all of the reporting requirements that apply to LLPs reporting under these standards, and it is intended to complement, not replace, them. The SORP should, therefore, be used in conjunction with the LLP regulations and accounting standards rather than on a stand-alone basis.

The provisions relating to retirement benefits have been updated in the new SORP, and this is a fairly complex and significant part of the document. The LLP’s contractual or constructive obligation to pay retirement benefits to past members can be categorised in several different ways: they might be a basic financial instrument (under section 11 of FRS 102; a complex financial instrument (under section 12 of FRS 102); a contingent liability (under section 21); or possibly an insurance contract, which would fall within the scope of FRS 103. The SORP has a flowchart, set out in paragraph 76B, which helps to determine which guidance will apply.

A new paragraph has been added to the related party section. LLP SORP 2010 already required disclosures about transactions with key management personnel but the new paragraph 130A states the following: ‘Paragraph 33.7 of FRS 102 requires the disclosure of the total of compensation paid to key management personnel which may comprise elements of employee remuneration and profit attributable to members’. This disclosure of remuneration was not previously required under related party disclosures.

Charities SORP

Charities SORP 2005 has been replaced by two new Charities SORPs. One of these is based on the FRSSE 2015, for use by charities that choose to adopt it and qualify as small under the Companies Act 2006. The other is based on FRS 102 and is for any size of charity. The choice is made trickier because the FRSSE-based SORP is likely to have a short life as it is due to be reviewed by 2016.

As with the LLP SORP, the new Charities SORP has been amended with regard to retirement benefits and related party disclosure. Additionally, the number of headings within the SoFA has been reduced and a ‘plain English’ style adopted to describe the nature of the income or expenditure included within each heading of the SoFA, through its columnar presentation distinguishing the classes of fund held: unrestricted income, restricted income and endowment, is retained.

The Charities Commission and the Office of the Scottish Charity Regulator have together produced guidance that sets out the main differences between SORP 2005 and the FRS 102 based new SORP:

They have also produced a help-sheet that maps SORP 2005 into the Charities SORP (FRS 102) paragraph by paragraph, giving explanations why when any SORP 2005 requirements have not been included in the new SORP. You can access this useful document here:

To aid the trustees in their choice of which of the new SORPs to adopt, a help-sheet has been published that analyses the differences between the two new SORPs.