Finance: Sorp will require charities to show if they have achieved aims

Sorp 2005 was published last week, containing more requirements for charities to show in their accounts whether they have achieved their objectives.

The Charity Commission's accounting standard for the next five years adds to pressure on charities to be more transparent and accountable about what they do.

The revised Sorp, which comes into effect on 1 April, says that charity accounts should show the costs of activities against the objectives they are intended to achieve. It recommends that a link be created between the trustees' annual report and the Statement of Financial Activity, or Sofa, enabling the reader to see the resources expended to support particular activities.

"Sorp 2005 helps charities explain what they do, how they go about it and what they achieve, pulling together narrative and financial reporting into a coherent, outcome-focused package," said David Taylor, Charity Commissioner and chair of the Sorp committee.

But the Commission has not relented on the most contentious item that emerged from its three-month consultation - how to show heritage assets, such as works of art, in accounts.

Charities such as the National Gallery had objected to a requirement to list them at value in the balance sheet because they believed it distorted the real financial situation of an organisation (Third Sector, 10 November).

But the Commission said the Sorp can't "rewrite or overrule" the guidelines of the Accounting Standards Board, which has the legal authority to set accounting standards in the UK.

Sophie Chapman, policy and campaigns officer at the Charity Finance Directors' Group, said: "We are de-lighted that it takes forward so many of the recommendations of our Inputs Matter report, including the correlation between income streams and related activity costs."

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