The Charities SORP-making body has set out plans for changes to the charity accounting framework.
The Statement of Recommended Practice (SORP), is developed to better meet the needs of users of charity reports and accounts.
The SORP sets out the financial reporting requirements that apply to almost all charities preparing accounts, and is made up of the Charity Commission for Northern Ireland, the Charity Commission for England and Wales and the Scottish Charity Regulator (OSCR).
The group is introducing changes to the development process of the SORP following a governance review, which recommended that it must change in order to meet “new public expectations”. A new process for developing the SORP is intended to be in place from 2020.
The process needs to ensure a SORP that is both technically correct for true and fair accounting and that produces a report and accounts that users can understand and meets their information needs. Changes include:
- Reforms to the SORP committee to ensure a stronger culture of constructive challenge, better stability, and better representation of small charities and funders with an interest in the impact charities have.
- The introduction of a new engagement process; 7 stakeholder groups will be set up to work in partnership with the SORP committee. Each engagement strand will involve individuals and organisations with an interest in financial reporting and the work of the sector, to ensure user needs are understood and considered early on in the process of writing the next SORP.
Nigel Davies, joint chair and head of accountancy services at the Charity Commission said: “We know from our own research that the public cares deeply about financial transparency from charities.
“Charity accounts are an important opportunity for trustees to communicate the difference they are making; today’s announcement reflects our joint commitment to ensure that charity accounts work for those that matter – beneficiaries and the public.”
Jelena Griscenko, professional accountant, compliance and enforcement, the Charities Regulator, added: “Should the SORP be approved in Ireland, the Charities Regulator will be the newest member of the SORP-making body.
“We recognise the need for an effective SORP process that is fully representative and works for everyone, including across different jurisdictions. We regard proactive and open engagement as essential to the future success of the SORP.”