As charity finance directors and trustees begin to grapple with the new Sorp, it is as well to remember that accounts are prepared under the overarching UK standard, FRS 102, so the Sorp is not necessarily the only authority for charity accounting and reporting. Changes to FRS 102 might affect the Sorp – or they might not.
For instance, a recent consultation has been issued by the Financial Reporting Council on a change to FRS 102. To a casual reader this might seem to offer succour to those charities that are having to book liabilities into their accounts for multi-employer defined-benefit pension scheme recovery plans. To quote the FRC: "The draft amendments set out in this Financial Reporting Exposure Draft propose to clarify that, for entities already recognising assets or liabilities for defined-benefit plans in accordance with FRS 102, no additional liabilities need be recognised in respect of a 'schedule of contributions', even if such an agreement would otherwise be considered onerous."
Sadly, this does not mean that charities are off the hook where they are anticipating increased liabilities under the new Sorp. The amendment means only that if you already book a liability under FRS 17, there would be no need to increase it for a recovery plan. This does not affect the new Sorp's treatment.
The larger-charities Sorp cross-refers frequently to FRS 102. Most of these references are supporting material to the module in question. However, there are a number of topics where the Sorp is not totally comprehensive and the user is required instead to consult FRS 102 itself. These include aspects of the following: rules on first-time adoption of the new Sorp, dealing with long-standing legacies, holding intangibles in the accounts, various issues around financial instruments, concessionary loans, hedge accounting, final- salary scheme accounting and the treatment of any special purpose entities.
Additionally, there are some topics in the wider standard that the Sorp does not consider at all: agriculture – this might affect some educational or heritage organisations; extractive activities – this is the least likely to affect charities; service concession arrangements – this could affect any organisation involved with PFI or PPP contracts. These are all good reasons why those involved in charity finance sometimes need to be ready to look beyond the Sorp.
HM Revenue & Customs has just released its most recent list of "deliberate tax defaulters", including the names of individuals or businesses and how much they owe in tax. The list includes a hairdresser, a takeaway shopkeeper, an engineer, a kitchen designer and a car salesman. Between them they owe tens of millions of pounds in tax and penalties. HMRC says it should not be assumed the defaults are currently taking place and each person or business might have changed their behaviour. Nonetheless, charities might want to remember that this list exists – not least because trustees of charities have to be "fit and proper persons" under HMRC rules.
But this is an ill-defined term – there is no formal clearance mechanism, so trustees can be asked only to self-certify that they are indeed fit and proper.
However, simply Googling the name of a trustee+HMRC will, if applicable, lead you to the relevant HMRC page listing the named offenders. Alternatively, the pages can be accessed and reviewed at http://www.hmrc.gov.uk/defaulters.
Don Bawtree is lead partner for charities at accountants BDO LLP