Charities 'should make financial information on websites Sorp-compliant'

The final report of the Sorp Governance Review Panel also recommends a simpler Sorp for smaller charities and a cut in the number of Sorp committee members

Accounting (Photograph: Getty Images)
Accounting (Photograph: Getty Images)

Charities should be encouraged to make financial information on their websites and in press statements compliant with the Statement of Recommended Practice, a review has recommended.

The Sorp Governance Review Panel has today published its final report, which also recommends a simpler Sorp for smaller charities and a reduction in the number of Sorp committee members.

The shake-up of the Sorp proposed in the report says the four charity regulators for the UK and the Republic of Ireland should encourage charities to make their use of financial information outside their annual reports and accounts compliant with the Sorp.

"There is a need for the charity regulators to identify good practice guidance on the form and content of non-statutory financial reporting by charities to encourage greater consistency with the report and accounts and to help in calling out misleading financial reporting by charities," the report says.

"There should be an explicit statement that where a charity provides financial information outside the statutory accounts it should be consistent with the Sorp-compliant accounts."

The report says engagement with a wider range of stakeholders is needed to help the Sorp develop and remain relevant into the future.

This includes reaching out to more umbrella bodies and using social media to a greater extent, the report says.

The review, which was chaired by the academic Gareth Morgan, came after a number of calls to increase the representation of donors, beneficiaries and trustees on the Sorp committee, with both the Directory of Social Change and the National Council for Voluntary Organisations having used a consultation on the new Sorp to call for a more diverse membership including non-finance stakeholders.

Joe Saxton, founder of the research consultancy nfpSynergy and a former Sorp committee member, said: "Having spent three years on the Sorp committee and carried out research with donors on their reaction to statutory reports and accounts, I know how far the current Sorp is from what the public wants.

"So I am delighted to see that the review of the Sorp is making some fundamental and far-reaching proposals for its governance and structure. I look forward to a sector effort to develop Sorp to help build trust in charities."

Caron Bradshaw, chief executive of the Charity Finance Group, said she broadly welcomed the findings of the report, but warned that it was important the committee did not skew too much in favour of funders and the government when reducing the number of committee members.

She also warned that extending the Sorp to non-statutory financial reporting by charities should not become a "perverse incentive to publish less information, or to ensure that information published meets the underlying accounting and financial reporting principles at the expense of being easy to understand".

Bradshaw raised worries about the resources required to extend the Sorp to this type of financial reporting and called for charities to be adequately supported with appropriate guidance.

"It’s important that, in driving charities towards embracing the need to be transparent with stakeholders, we do not simply flood users with data," Bradshaw said.

"Information published needs to be understandable and accessible, and we look forward to playing a part in ensuring that charities, and in particular finance professionals, continue to be the driving force behind greater transparency and increased standards of finance reporting."

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