Charities SORP 2015

The new regulations for England and Wales are yet to come into force

The accounts and reports regulations are in place for Scotland (see 'Related documents' section on this page), with Northern Ireland expected soon.

However, those for England and Wales, the 2015 Charity (Account and Reports) Regulations, authorising use of the SORP 2015, have not been issued and are not expected to be issued soon. 

For England and Wales the current regulations are those issued in 2008, which stipulate that accounts must be prepared in accordance with the SORP 2005.

The Charity Commission’s recommended solution to this problem can be found within its guide CC15c

Section 7, Legal requirements for annual reports, highlights the following:

The detailed legal requirements for the trustees’ annual report are set out in The Charities (Accounts and Reports) Regulations 2008 which provide the legal underpinning for the recommendations made in the SORP 2005. The headings used in this section are taken from the SORP 2005, however trustees may choose how they lay out their annual report, provided all the legal requirements are met.

Small charities, whether preparing receipts and payments accounts or accruals accounts, have identical annual reporting requirements under the 2008 Regulations and should follow sections 1 and 2. Large charities, which are subject to statutory audit, must follow sections 1 and 3.

All charities preparing accounts on an accruals basis, whether small or large should also refer to the SORP. SORP 2005 references are given as these cross refer to the 2008 Regulations.

Once the 2008 Regulations are updated to reflect the SORP FRS 102 and SORP FRSSE then these references will be similarly changed. In practice all the requirements of the 2005 SORP and the 2008 Regulations are also found in the SORP FRS 102 and SORP FRSSE.

Trustees using the SORP FRS 102 or SORP FRSSE may do so for financial years beginning on or after 1 January 2015; this will be necessary for their accounts to give a true and fair view as required by the 2008 Regulations.

For the minority of charities preparing group accounts there are some additional reporting requirements and these are set out in section 4.

The regulations require that the annual report is dated and signed by one or more trustees, each of whom has been authorised so to do.'

Section 8 highlights why the new SORP can be used despite the regulations not having yet been issued. Paragraph 18 of the introduction to the FRS102 SORP includes a specific provision that if regulations and legislation are not in place by 31 December 2015, then the SORP will have no effect.

It is important to note that, if the regulations are not issued, then reports will need to be amended or reporting delayed until the regulations are available.

The general view is that a delay until the regulations are laid would be advisable. 

If proceeding, the guidance suggests in 8.1.5 that trustees include a statement in their report:

'It is recommended that the following reference is made by all charities in the trustees’ annual report:

The financial statements have been prepared in accordance with the accounting policies set out in notes to the accounts and comply with the charity’s governing document, the Charities Act 2011 and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard for Smaller Entities published on 16 July 2014.

Or, as applicable:

The financial statements have been prepared in accordance with the accounting policies set out in notes to the accounts and comply with the charity’s governing document, the Charities Act 2011 and 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 published on 16 July 2014.

It is recommended that non-company charities (those charities which are not charitable companies) make the following statement in the accounts:

The accounts (financial statements) have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard for Smaller Entities published on 16 July 2014, the Financial Reporting Standard for Smaller Entities (FRSSE), and the Charities Act 2011 and UK Generally Accepted Practice as it applies from 1 January 2015.

The accounts (financial statements) have been prepared to give a "true and fair" view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a "true and fair view".

This departure has involved following the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard for Smaller Entities published on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.

Or:

The accounts (financial statements) have been prepared in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) issued on 16 July 2014 and the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) and the Charities Act 2011 and UK Generally Accepted Practice as it applies from 1 January 2015.

The accounts (financial statements) have been prepared to give a "true and fair" view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a "true and fair view".

This departure has involved following Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) issued on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.'

For auditors, Section 8.4.2 Advice for auditors, states that:

'Auditors should contact their professional body for advice as to how to modify their audit reports until such time as the 2008 Regulations are updated.' 

Suggested wording will follow and is likely to be an explanatory paragraph in the audit report.