Accounting practice must be more charity-focused, argue Charity Commission and OSCR

Report says Sorp should be amended to reflect the needs of small charities

The Statement of Recommended Practice, which governs charity accounting, should focus more on the needs of small charities, according to a report released today by the Charity Commission and the Office of the Scottish Charity Regulator.

Charity Reporting and Accounting:Taking Stock and Future Reform will be presented to a meeting of charity representatives today.

It outlines the views of operational charities, auditors, funders and academics about effective charity reporting, and is based on a series of consultations overseen by the Sorp Committee, which handles the development of the Sorp.

The report says the Sorp should be amended to be more suited to the needs of small charities, with extra information for larger organisations, and should be amended to change the accounting rules for grants given over more than one financial year.

Other key findings in the report are that funders should be seen as the key stakeholders that will benefit most from annual reports, that charities should be more balanced in reporting failures as well as successes and that volunteers should not be included in the main body of accounts.

The report, which was prepared by a team of academics from Queen's University, Belfast, will feed into an Accounting Standards Board consultation, which is looking at reporting standards across public, private and not-for-profit sectors in the light of a decision to bring UK accounting regulations in line with International Financial Reporting Standards.

Ray Jones, policy accountant at the Charity Commission and one of the leading figures in the revision of the Sorp, said the ASB's consultation would be the biggest challenge in charity accounting in more than 15 years.

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