For accounting periods commencing on or after 1st January 2015, charities preparing their accounts under the accruals basis must do so using a new SORP (Statement of Recommended Practice). This will change the layout and content of both the Trustees' report and Financial Statements, and will necessitate restatement of the previous year's accounts to give comparative figures for the current year.

Charities with a 31 December year end are among the first to apply the new rules for their 2015 accounts.

In this first of a series of blogs about the changes, I give a reminder of the new rules:

Charities who meet the definition of a small company under Companies legislation (two out of three of the following, for this year and last year; income not exceeding £6.5 million, assets not exceeding £3.26 million and no more than 50 employees) can prepare their accounts under the FRSSE SORP (Financial Reporting Standard for Small Entities) however, the FRSSE SORP has now been withdrawn and will therefore only apply to one year's accounts. Small charities can instead choose to use the alternate FRS 102 SORP (Financial Reporting Standard 102), something that most of our small charity clients appear to be deciding to do. This will have the benefit that the accounts will only change once. If charities choose to use the FRSSE SORP then they'll need to restate their accounts again the following year.

Charities who are members of a group of companies must also check that the whole group is small to be able to use the FRSSE SORP.

Non-small charities must apply the FRS102 SORP.

In addition to deciding which SORP they may / must apply charities also need to be aware to be aware that both SORPs contain additional requirements from 'larger' charities - defined as those subject to a statutory audit (incoming resources of more than £500,000 in Scotland).

Next time I'll give more details about the changes to the content of the Trustees' report.


Jenny Simpson is a partner at Wylie & Bisset LLP and sits on the UK Charity SORP Committee. The blog originally appeared on SCVO's website in February 2016 and has been reproduced with both Jenny & SCVO's permission.