Finance News: SCVO warns on regulation in new Sorp draft

Tania Mason

The Scottish Council for Voluntary Organisations has warned that the new draft of the Statement of Recommended Practice (Sorp) goes beyond its remit of interpretation of charity accounting rules and strays into regulation.

The new draft from the Charity Commission is based on recommendations from the Strategy Unit report Private Action, Public Benefit, which applies only to England and Wales. The SCVO is worried that if the revised Sorp is adopted, it will mean that Scottish charities will be subject to English regulation.

The section in contention concerns the Trustees' Annual Report. Under the new draft, trustees will be required to provide much more detail than before in their annual reports, and the SCVO says that much of the new information demanded relates not to accounting, but to accountability.

New requirements for trustees include giving detailed descriptions of the charity's activities and future plans, outlining the trustee-training policy and procedures, and examining their performance against set objectives.

"Regardless of any arguments about the need for increased transparency, is the trustees' annual report, as signed off by the auditors, the place for such requirements?" asked Teresa Bray, finance director at the SCVO.

"Auditors will often not have the skills or experience to validate them."

Bray said the new requirements "should be included in the regulatory framework drawn up by the Charity Commission and not included in the Sorp, which has a wider jurisdiction.

"Under devolution, charity regulation comes under the jurisdiction of the Scottish Parliament. The new Scottish Bill will be creating a new regulatory framework in Scotland. Additional reporting requirements will be developed under this framework and must not be imposed on Scottish charities through the Sorp," she added.

The SCVO's objections are laid out in its response to the consultation on the new draft of the Sorp, which closed on 1 October.

See Hot Issue, p15.

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