Charity Commission’s Statement of Recommended Practice (SORP)

The Charity Commission’s Statement of Recommended Practice (2005), affectionately known as SORP, summarises how charities preparing accounts under the accruals basis should be applying accounting standards to those accounts.  SORP (2005) was updated in June 2008 and applies to all accounting periods beginning on or after 1 April 2005.  Non compliance with the SORP is not recommended and could result in a charity’s audit report being qualified.

Over the past few years the various SORP’s issued have improved the quality of financial reporting by charities, bringing consistency and understanding within the preparation and interpretation of the many charity accounts that are prepared.  Copies of the SORP can be downloaded from the Charity Commission website.

The main areas covered by the SORP are as follows:

General introduction.
Content of the Trustees’ Annual Report, including historic and other charity data, its objectives, activities, achievements and performance.  The Report must state the charity’s policies in respect of trustees, risk, investments, reserves and making of grants.  The Report must clearly indicate how the charity meets its Public Benefit Requirement and confirm that the trustees have regard to the Charity Commission’s guidance on this all important matter. 

General accounting principles.
Statement of financial activities (SOFA) clearly setting out incoming resources and resources expended (together with the matching of relevant income and expenditure; transfers between funds; other recognised gains and losses).

Balance sheet.
Cash flow statements, consolidation of subsidiary undertakings etc.

Are you complying with the SORP?

Do you understand what is required of you as trustees?

Contact Plummer Parsons for more information.