ACCA welcomes the opportunity to respond to Exposure Draft of the new Charities SORP. The SORP has an essential role to provide charity sector specific guidance in applying the updated Financial Reporting Standard FRS102 applicable in the UK and the Republic of Ireland issued in September 2024.

Our response focusses on those key aspects where either the SORP process has significant latitude to set the requirements: tiered reporting (section 1) and the trustees’ annual report (section 2) or the implications for smaller charities (sections 9 and 10) are so significant that this merits particular focus. In this regard ACCA believes there is a need for further dialogue in respect of lease accounting (section 5) for public benefit entities.

ACCA makes following over-arching observations:

• ACCA agrees with the approach, as noted in the Invitation to Comment, to ‘think small first’ since smaller charities (Tier 1) comprise the vast majority of charities in UK and Ireland but ACCA would question whether that the philosophy has carried through fully into both the narrative and accounting aspects of the SORP. Evidence provided to the Charities SORP- Committee (2009) clearly shows that charities with  income below £500,000 (tier 1 in the Exposure Draft) are in the main wholly reliant on volunteers and this has not been fully recognised  (Charities SORP Committee December 2009 paper 3). In part this situation is due to changes required by FRS102 particularly in respect of lessee accounting (see our response to section 5). These concerns inform our response to sections 1 and 5.
• ACCA would support the SORP-making body should it decide to approach the FRC to discuss allowing more time to identify the most appropriate technical solution for non-exchange components of leases (see also our answer to question 29) given that the proposal of the SORP-making body was not accepted and the solution in the Exposure Draft is potentially misrepresenting as to the level of income upon initial recognition.
• ACCA recognises the important role of the SORP in maintaining public trust and confidence in charity financial reporting and the contribution the SORP-making body makes in developing educational materials to assist the charity sector implement the SORP. ACCA recommends the SORP-making body has a dialogue with the sector about the full range of supportive materials such as helpsheets or information sheets needed to make a success of the next SORP (see our response to section 10).
• As stated in our response to the DCMS consultation on financial thresholds in charity law ; although the intention is to be: ‘…proportionate and reduce unnecessary administrative burdens on charities where possible, particularly for small organisations’ this needs to be balanced with the importance and benefits that having thresholds brings to encouraging and underpinning good charity governance of the money entrusted to the sector.

To read the response in full, please download the consultation document on found on this page.