Charities SORP (FRS102)

What is Charities SORP?

Charities SORP is the Statement of Recommended Practice which provides guidance on how charities should prepare and present their financial statements in accordance with FRS102. It is issued by the Charity Commission for England and Wales, the Charity Commission for Northern Ireland and the Office of the Scottish Charity Regulator in their role as the joint SORP-making body, as recognised by the Financial Reporting Council. While it is not currently mandatory outside of the UK, it is widely accepted to be best practice for the charity sector and, as such, many Irish charities have chosen to adopt Charities SORP. The key principles underpinning Charities SORP are transparency and accountability.

Why apply Charities SORP?

It is best practice for charities
Openness
Transparency
Accountability
Enhanced reputation, trust and confidence
Inspire confidence in funders and donors
Demonstrates a commitment to good governance

Challenges of applying Charities SORP

Disclosures	Trustee Report	Accounting system
Charities SORP requires significant additional disclosures in the areas of reserves, sources of funding, analysis of expenditure, restrictions attaching to funding and staff costs.	Trustee Report requires significantly greater detail than FRS102. To apply the spirit of Charities SORP requires full and frank disclosure of risks and risk management, challenges, future plans, achievements versus plans, governance practices and more.	Accounting for transactions under Charities SORP can be significantly different compared to FRS102 and some accounting systems may not be capable of recording this accurately.
Knowledge and capacity	Accounting policies	Historic information
Not all charities have the capacity or the knowledge within their organisation to devote the time and effort to become SORP compliant. Equally many very experienced directors/trustees do not understand how to read/interpret SORP accounts.	Accounting policies for certain classes of transaction vary substantially from FRS102. This has an impact on both recognition and the wording of accounting policies in the financial statements.	Opening reserves at the start of the comparative period need to be analysed between restricted and unrestricted funds. For some organisations it is not readily apparent what opening reserves comprise.

How can Forvis Mazars help?

The Forvis Mazars charity team has an in-depth working knowledge of Charities SORP and many years of experience in supporting our charity clients with both first-time adoption and with ongoing interpretation of Charities SORP. Below are some examples of how we can support you:

Perform an impact assessment
Prepare shadow financial statements
Train & upskill finance teams
Train directors/trustees to ensure they understand SORP accounts
Support and advice for in-house transition
Full transition to Charities SORP
In-depth SORP compliance review for organisations that currently apply SORP but may be concerned about the level of compliance
Assist with tailoring your accounting policies
Ongoing technical advice post-transition
Assist with mapping nominal ledger codes for external and internal reporting

Latest news

West still strong for entrepreneurs

The following article featured in The Business Post 'Looking West for business growth' special report on 25 October 2024. Audit & Assurance Partner, Maurice Hickey, gave his insights on the evolving business landscape in the west of Ireland.

PAYE Settlement Agreement for 2024

It is getting close to that time of year when employers need to consider whether they are required to make an application to Revenue in relation to a PAYE Settlement Agreement (PSA) for 2024.

Finance Bill 2024

Following on from Budget 2025 the Government has released the Finance Bill 2024 which deals with the various tax matters emanating from the Budget and some additional amendments to tax legislation. The Finance Act is likely to be passed in November and this may differ from the Finance Bill as currently enacted.