A new international accounting standard for not-for-profits

Is a move away from GAAP and SORP on the horizon?

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The Charities Statement of Recommended Practice (SORP) is a very familiar part of UK-Ireland Generally Accepted Accounting Practice (GAAP).

The SORP has been adopted throughout the UK and is under active consideration for Ireland. GAAP has been updated with the new financial reporting Standard FRS102 taking effect from 1 January 2026 and a new charities SORP is in development to apply it.

In parallel the International Non-Profit Accounting Guidance (INPAG) has been developed with a planned launch in 2025. Would having INPAG matter if we still have the SORP?

It matters for two reasons:

  • GAAP is not developed in isolation.
  • INPAG could offer a better way forward.

How INPAG came about

The impetus for the International Financial Reporting for Non-Profit Organisations (IFR4NPO) initiative came from UK-Ireland. The Consultative Council of Accountancy Bodies (CCAB) carried out international research in 2014 and the resulting report recommended that an international framework be developed.

In response ACCA issued some advice in the form of the Companion Guide (2015) based on the SORP and the International Financial reporting Standard for SMEs (IFRS for SMEs). Subsequently the IFR4NPO project came into being with a mission to develop the first global standard for non-profits. It too is based on the IFRS for SMEs.

Why INPAG might become a better solution for charities

Post the next SORP (the Exposure Draft for which is expected in late 2024 or early 2025) making a subsequent change to INPAG might offer a better solution because:

  • UK-Ireland GAAP has alignment with IFRS as a goal and adopting INPAG fits this philosophy.
  • INPAG is led by, and developed for, non-profits whereas GAAP is for-profit led with adaptations made for charities - a role fulfilled by the SORP.
  • Arguably, the current GAAP approach is not serving the charity sector well. Once INPAG is launched this enables the two to be compared to see which approach provides the better longer-term fit for UK-Ireland charities.

The consultation process and how to get involved

The third and final INPAG Exposure Draft (ED2) closes for comment on 16 September. ED3 is looking at key topics including fund accounting, expenditure analysis, fundraising costs and related party definition and disclosures.

An ACCA factsheet compares ED3 with the current SORP so that you can focus your response on the key issues that will affect your charity/ charity clients. Your views and suggestions do matter.

Nigel Davies FCCA, UK member, IFR4NPO Practitioners’ Advisory Panel

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