The Sorp Revision: Formats

By finance expert Don Bawtree

Don Bawtree
Don Bawtree

Most charities preparing accrual accounts have to follow the Sorp: these are usually either limited companies or charities with incomes of more than £250,000 (£100,000 in future in Northern Ireland). Technically, it is only "best practice" in the Republic of Ireland. Companies still follow the Sorp, subject to some (existing) extra disclosures.

The new accounts framework, FRS 102, applies to larger charities, but an older simplified standard, the FRSSE, still applies to smaller ones. The latter must meet two out of three conditions: an income of less than £6.5m; a balance sheet total of less than £3.26m; and fewer than 50 employees.

Smaller charities can produce less information, but they can't mix and match - they must follow either the smaller or the larger rules. If the FRSSE is silent on a topic, charities must follow the Sorp or refer to FRS 102.

Some important differences are that smaller charities do not have to prepare cash-flow statements, analyse their Sofas by activity, produce long annual reports or disclose so much about financial instruments.

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