The amendments apply to all charities in the UK and Republic of Ireland that follow the Charity SORP for reporting periods beginning on or after 1 January 2016. The SORP has been released by the Charity Commission, Office of the Scottish Charity Regulator and CIPFA.

The revised standard sets out a raft of changes following the introduction of FRS 102, Financial Reporting Standard applicable in the UK and Republic of Ireland, and annuls the original concept of offering two accounting frameworks for charities under the old Financial Reporting Standard for Smaller Entities (FRSSE) and UK GAAP systems.

Now that the FRSSE has been withdrawn the Charity SORP will be a single framework for all charities regardless of their size.

It also confirms revised audit income thresholds for charities, with the limit now raised to £1m from the existing £500,000, which came into force across England and Wales in The Charities Act 2011 (Accounts and Audit) Order 2015 made on 19 February 2015.

 Withdrawal of the Accounting and Reporting by Charities: Statement of Recommended Practice is applicable to charities preparing their accounts in accordance with the Financial Reporting Standard for Smaller Entities (FRSSE)

Update Bulletin 1 sets out the following amendments to the text of the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with FRS 102, Financial Reporting Standard applicable in the UK and Republic of Ireland (Charities SORP (FRS 102)) first issued in July 2014.

Accounting and Reporting by Charities: The Statement of Recommended Practice (SORP) - Scope and Application module: inserting from when the amendments in this Update Bulletin are effective and implementing the withdrawal of the Charities SORP (FRSSE);

Module 6: Donated goods, facilities and services, including volunteers: amending the measurement basis of the carrying value for inventories held for distribution at no or nominal consideration to require their measurement at the lower of cost adjusted, when applicable, for any loss of service potential and replacement cost. The bulletin offers a definition of ‘replacement cost’;

Module 10: Balance Sheet and Module 24: Accounting for Groups and the Preparation of Consolidated Accounts: revising the maximum period over which goodwill and other intangible assets may be amortised from five to ten years in those exceptional cases where an entity is unable to make a reliable estimate of the asset’s useful economic life;

Module 12: Impairment of assets: prohibiting the reversal of impairment losses for goodwill;

Module 14: Statement of cash flows: requiring larger charities to prepare a statement of cash flows.

Module 17: Charity mergers: prohibiting merger accounting for charities that are companies and enter into a business combination with a third party; and

Appendix 1: Glossary: amending the definitions of larger charities and related parties. 1.2 There are no other changes other than those set out in this Update Bulletin to the Charities SORP (FRS 102).

The Charities SORP (FRS 102) Update Bulletin 1 is available here