Accountancy and Tax Update – Charity Newsletter Summer 2018

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SORP and Accounting

The CCEW and OSCR, who together are the SORP-making body, are inviting comments on amendments to the Charities Statement of Recommended Practice (SORP) following the amendments to UK & Irish accounting standards (FRS 102) ‘Triennial Review 2017’. The changes will come into effect for accounting periods beginning on or after 1 January 2019 although early application is permitted, provided all amendments are applied at the same time. Section 3 of the Bulletin will apply immediately after publication.

The changes to the SORP are to be made via a second Update Bulletin and include:

  • introduction of an accounting policy choice for entities that rent investment property to another group entity
  • clarification of the accounting treatment for payments by subsidiaries to their charitable parents that qualify for Gift Aid
  • clarification of the requirement for comparatives for disclosures required by the SORP
  • introduction of a requirement for a net debt reconciliation to be prepared as a note to the statement of cash flows.

Following a consultation period it is anticipated the final version of the Update Bulletin will be issued in October 2018, subject to Financial Reporting Council (FRC) approval.

CCEW have reviewed all charity accounts with modified audit reports in 2016 (97 charities) of which 45 were modified due to material non-compliance with the SORP.

Trustees need to check that there are sound financial systems and accounting records in place to ensure compliance with the SORP. If the auditor modifies the charity’s audit report then the trustees should consider whether explaining the circumstances of the modification in their trustees annual report is required.

Guidance: goo.gl/qVP5qo

 

This publication has been prepared by Robinson Reed Layton LLP. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.