The Financial Reporting Council (FRC) has approved the new accounting rules for charities to conform with the upcoming changes the UK GAAP, FRS 102, which will be compulsory from January 2015.
The Charities Statement of Recommended Practice (SORP) was developed by the Charity Commission Charity in England and Wales and the Office of the Scottish Charity Regulator (OSCR) and the final accounting framework will be published in early summer 2014.
The FRC board considered and approved both the SORP for the new Financial Reporting Standard (FRS 102) and the SORP for Financial Reporting Standard for Smaller Entities (FRSSE), although it is unclear whether a revised FRSSE will be agreed this year which could affect the latter.
The two SORPs are necessary to support charities implementing the new UK GAAP which takes effect for financial years beginning on or after 1 January 2015.
Sam Younger, Charity Commission CEO and joint chair of the SORP committee said: ‘The FRC's approval is a culmination of many years work. The result is a high quality accounting and reporting framework for charities.’
An exposure draft on the SORP, released in July 2013, resulted in some changes being made to the standard following the consultation exercise.
Laura Anderson, head of enforcement at OSCR and joint chair of the SORP committee said: ‘The FRC has acknowledged the wide-ranging and exemplary consultation exercise undertaken in developing the new SORP framework. Of course, any change is a challenge to the sector but these high quality SORPs should equip the sector to make the transfer to new GAAP in 2015.’
The SORP-making body anticipates publishing the new SORPs on the dedicated Charity Commission micro-site in the summer and possibly as early as July.
It is understood that the FRC is planning to issue a revised FRSSE in exposure draft during June, although it is not clear yet whether smaller charities will be able to use the new EU accounting directive as an alternative basis for reporting.
