Policymakers have called for major changes to the Charities SORP – also known as the Statement of Recommended Practice on Accounting and Reporting by Charities.
It comes after a panel of experts published their final report into the financial reporting requirements that apply to almost all charities preparing accounts.
The governance review panel was formed last year after several reports indicated that the current Charities SORP was not fit for purpose and required drastic improvements.
It comprises of a representative from each of the four charity regulators of the UK and Ireland: the Charity Commission for England and Wales (CCEW), the Office of the Scottish Charity Regulator (OSCR), the Charity Commission for Northern Ireland (CCNI) and the Irish Charities Regulator (CR).
Notably, the four bodies formed last year to create the new charity SORP making body, responsible for developing the Statement of Recommended Practice for the not-for-profit sector.
Publishing a number of major recommendations across five key themes, the SORP review panel said charity reporting and accounting “must be refocussed with the views and needs of the users of charity reports and accounts at its centre”.
The key recommendations are listed below in full:
- The needs of the wider public and beneficiaries require a refocusing of the SORP and greater simplification of reporting requirements for smaller charities
- The SORP Committee should be retained but reforms are needed regarding size, composition and clarification of the respective roles of the SORP-making body and SORP Committee.
- Broader and ongoing engagement is needed with a much wider group of stakeholders if the SORP is to continue to be fit for purpose.
- The sector and charity regulators should collaborate to identify and codify best practice in non-statutory financial reporting.
- The SORP-making body, supported by the Financial Reporting Council (FRC) needs to ensure that the redesigned SORP development process takes effect.
- The charity regulators are asked to ensure that SORP process is adequately resourced to implement these recommendations.
Commenting on the report, Charities SORP Committee Governance Review Panel Chair, Professor Gareth Morgan, said: “As an academic, and as a charity practitioner, I am aware of the strengths of the Charities SORP but I have also been aware of concerns expressed by some.
“Our consultation led to a wide range of really constructive suggestions, and I am confident that if the Panel’s recommendations are implemented the SORP will be considerably more effective in future.”
To access the report in full, please click here.