This article, the eleventh in our series on charity accounts, will focus on how financial instruments are accounted for under FRS 102 SORP, including what disclosures charities are required to make about their basic financial instruments
One of the biggest changes introduced by FRS 102 is how financial instruments are recognised, measured and disclosed in accounts. This change has been reflected in the FRS 102 SORP by the inclusion of module 11 on accounting for financial assets and financial liabilities.
The glossary to the SORP defines a financial instrument as ‘a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity’, which therefore covers a wide range of assets and liabilities.
Certain types of financial instrument are dealt with in other sections of the SORP and are therefore excluded from the financial instruments section. These are investments in subsidiaries, associates and joint ventures, leases and employers' rights and obligations under employee benefit plans.
