Charity SORP update

The update bulletin sets out the following amendments to the text of the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (Charities SORP (FRS 102)). 

Accounting and Reporting by Charities: The Statement of Recommended Practice (SORP) - Scope and Application module

Inserting from when the amendments in this Update Bulletin are effective and implementing the withdrawal of the Charities SORP (FRSSE).

Module 6: Donated goods, facilities and services, including volunteers

Amending the measurement basis of the carrying value for inventories held for distribution at no or nominal consideration to require their measurement at the lower of cost adjusted, when applicable, for any loss of service potential and replacement cost. The bulletin offers a definition of ‘replacement cost’.

Module 10: Balance Sheet and Module 24: Accounting for Groups and the Preparation of Consolidated Accounts

Revising the maximum period over which goodwill and other intangible assets may be amortised from five to 10 years in those exceptional cases where an entity is unable to make a reliable estimate of the asset’s useful economic life.

Module 12: Impairment of assets

Prohibiting the reversal of impairment losses for goodwill. 

Module 14: Statement of cash flows

Requiring larger charities to prepare a statement of cashflows. 

Module 17: Charity mergers

Prohibiting merger accounting for charities that are companies and enter into a business combination with a third party. 

Appendix 1: Glossary

Amending the definitions of larger charities and related parties.