Demonstrating the difference charities make through words and numbers is the focus of the charities Statement of Recommended Practice (SORP). Charity reporting and accounting stepped out of the shadows of UK Generally Accepted Accounting Practice (GAAP) in 1988. Setting itself apart from mainstream corporate reporting, this SORP framework has matured with its own trustees’ annual report (much more than a private company directors’ report), its own performance statement called a Statement of Financial Activities (SoFA) akin to a company’s income and expenditure account, and an adapted balance sheet which replaces retained reserves with fund accounting.

The distinctive features include notes on fund accounting, an expanded definition of related parties and greater disclosure of related party transactions and attribution of assets and liabilities across the types of fund held- unrestricted and restricted funds. For accounts to be ‘true and fair’ old GAAP and since 2015 modern UK-Irish GAAP require adherence to the SORP.

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