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Spoilt for choice

You wait 10 years for a new SORP and then two come along at once. Don Bawtree explores some of the changes and their implications for auditors and examiners

The new charity Statement of Recommended Practice (SORP) will present challenges to auditors (and examiners) of charities when it is implemented for accounting periods starting 1 January 2015 – and not just because there will be two versions of it (see Fast Facts, p10). There is a vast choice of accounting options available for smaller charities, and each charity will need to assess their impact and reporting choices; then of course the auditor is called upon to opine on the end result.

Noting that there are minor variations to the requirements across the UK and Republic of Ireland, and to accommodate Company Law, the new accounting framework offers choices:

Small charities that are not limited companies can continue to adopt receipts and payment accounting.

Charities below the audit threshold for charities (an income threshold of £500,000 but likely to change in the next year to £1,000,000) can either:

  • Adopt Charities SORP FRSSE;
  • Adopt Charities SORP FRS 102, but take advantage of the reduced reporting requirements therein; or
  • Adopt Charities SORP FRS 102 in full.
Charities above this threshold either:
  • Follow the FRSSE SORP if within the FRSSE thresholds; or
  • Follow the FRS 102 SORP by choice, or because their size warrants it.
Charitable companies registered in the Republic of Ireland may only follow the FRS 102 SORP; all other charities will need to decide their best route

This is an extract from an article in the February 2015 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.

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