The governance review will be undertaken by an oversight panel comprising an observer representative nominated by the Financial Reporting Council (FRC) and a representative from each of the four charity regulators.  It will be overseen by Professor Gareth Morgan, an independent chair retained by the SORP-making body.

The charities SORP is the set of rules, first issued in 1995, which governs charity accounting for charitable companies and larger charities and was initially developed by the Charity Commission for England and Wales (CCEW) and the Scottish Charity Regulator (OSCR).

The review will assess whether the SORP-making process commands confidence and addresses the transparency and public confidence challenges facing charities, and will ensure that any revised arrangements adhere to the FRC policy on developing SORPs.

The Charity Commission for Northern Ireland (CCNI) was added as joint members of the SORP-making body in June 2018. The FRC has also approved the inclusion of the Charities Regulator in the SORP-making body but this is subject to the SORP being formally adopted for use in the Republic of Ireland and made mandatory for Irish charities.

The governance review will consider a number of issues including the composition of the advisory SORP committee; identification of, and engagement with, key stakeholders in the SORP development process; and potential of changes to membership of the SORP committee should the FRC agree the remit of the SORP to make recommendations covering non-statutory financial reporting by charities.

The governance review will be undertaken during 2018 and any recommendations requiring change to the composition of the advisory SORP Committee and the SORP development process will be taken forward by the SORP-making body in 2019 in time for the development of the next full SORP.

Laura Anderson of OSCR who is one of the joint chairs of the SORP committee, said: ‘The review comes at a critical juncture as we look to take stock and develop the next SORP with the needs of all four charity law jurisdictions in mind.

To be effective we need a SORP process that is fully representative and delivers a SORP that it is clear, accurate and meets the reporting needs of the users of charity reports and accounts whilst upholding the standards issued by the FRC.’

Gareth Morgan, the review chair, is emeritus professor of charity studies at Sheffield Hallam University where he led various research concerned with charity accounting and regulation. He has also advised a wide range of charities (mostly small to medium organisations) on accounting and governance issues though his firm, The Kubernesis Partnership. He has worked with charities and the charity regulators across the three UK jurisdictions, and with the Irish Charities Regulator.

Charities SORP committee information is here

Report by Pat Sweet