New financial reporting arrangements for charities to be drawn up

The Accounting Standards Board will draft a new public benefit entities standard and a new Sorp for voluntary organisations

Financial reporting
Financial reporting

The Accounting Standards Board will develop an accounting standard for public benefit entities, including charities, housing associations and educational establishments, it has announced.

It has also said it will retain a statement of recommended practice for charities, and that work will begin on drafting both the new PBE standard and a new Statement of Recommended Practice.

The announcement comes in a document containing Financial Reporting Exposure Drafts 43 and 44, which lays out future rules for financial reporting.

The draft sets out a three-tier system, which will have standards for large, publicly listed companies, for small and medium-sized companies, and for smaller organisations. It is the latest step in the process of bringing the UK into line with international financial reporting standards.

But the ASB says the IFRSs were not designed with not-for-profit entities in mind, so its committee for accounting for public benefit entities, known as Cape, would be responsible for developing a separate standard for those organisations.

 "The ASB is proposing that the PBE standard should be a ‘differences only’ standard – identifying where there are omissions in UK financial reporting standards that need addressing for PBEs," the report says.

Another exposure draft with information on a PBE standard will be published in 2011, the report says. Development of a new Sorp for charities will not officially commence until this is published.

Further consultation on a PBE standard is expected to take place in the near future, the report says, although it sets out no clear timescale.

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