Focus: Finance and Governance - Outlook - Why did Sorp examples take so long?

The Charity Commission has finally published its hypothetical examples of how to fill out the Statement of Recommended Practice 2005.

Two thoughts spring to mind. First, they contain few surprises and appear in formats that charities could have expected. Second, they do offer a certain amount of room for improvement.

There are, however, many positive elements. The reports are concise, with none longer than eight pages. This is an increase on what some charities have been used to preparing, but it is a welcome signal that War and Peace is not what is required.

The reporting of achievements is undertaken in a simple, clear fashion.

Statistical information is provided, but is modest in volume. The formats of the statements of financial activities show that some charities prefer to disclose specific activity headings, whereas those with more activities may find readability is improved by putting details in the notes.

The requirement to seek links between income and expenditure is treated sensibly. The Arts Theatre Trust, for example, includes "operation of theatre and arts centre" in both its income and expenditure. Equally, no attempt has been made to force links where none exist.

Inevitably, there are some less helpful areas. The tricky issue of reporting poor performance is barely addressed. The disclosed targets are not always met, but the trustees' reports rather skirt over this. Will this act as carte blanche for everyone else to do the same? The disclosure notes on costs are somewhat complicated, too. More practical examples can be found in the accounts of early adopters.

This last point leads nicely to the real examples to which links are provided on the Charity Commission website.

The group is dominated by larger charities. Smaller charities should regard the accounts as a bank of ideas rather than a benchmark because the volume of material in some of them is excessive for a smaller charity.

Comparing the accounts illustrates how much scope there is for interpretation.

Compare the Royal National Theatre with St John Ambulance, for example.

The former has general headings with the specific activities in the notes, whereas the latter has much detail on the face. Both are entirely permissible, but they do give the reader some very different impressions.

The expenditure notes are also worth a look. Some are clearer than the official examples.

In summary, the examples are welcome as reference points, although one wonders what took so long. There is useful guidance and, fortunately, little to undermine the Sorp 2005 implementation plans that most charities will already have in place.

KEY POINTS

- Example trustees' reports for Sorp 2005 have shown a welcome brevity

- The requirement to seek links between income and expenditure has been treated sensibly

- The difficult issue of addressing poor performance has been barely addressed.

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