Opinion: Hot issue - Is the Sorp too big a burden for small charities?

Last week, chartered accountant Peter Gotham argued that the new Statement of Recommended Practice is too much for small charities and puts off potential trustees. Andrew Hind of the Charity Commission disagreed.

NO - CHRISTINE TAYLOR, finance manager, Epilepsy Action

In general, it does not cause us a lot of problems because we already provide lots of detail in our accounts. As a member-led charity, it has always been important for us to be able to show our supporters how our work is benefiting people with epilepsy.

We have always been transparent in the way we disclose our financial information, and we have good systems in place to allow us to give a clear breakdown of our income and expenditure. Every line manager has a set of budget codes, and this means we can track how money is being spent within the organisation throughout each year.

A more challenging area for us is the extra requirements for the trustees' report. For example, we have a lot of volunteers who contribute to the work of Epilepsy Action and their time can be difficult to quantify.

Interpreting the additional requirements of Sorp can involve spending more time with our auditors, and there is a cost implication for the charity in this. However, once a format has been established, it should get easier each year.

NO - LES JONES, director, Charity Treasurers Forum

Some extra effort is required, but it is worth it even for small charities.

It's important to note that the Charity Commission has said it has a proportionate attitude to regulation - it is not going to be as rigid with smaller charities as it is with larger ones.

Lots of things in the Sorp are good for both large and small charities.

The whole question of reporting and transparency is important, even for smaller charities, if the sector is to maintain its credibility. Disclosing what your outcomes and impacts are can only be a good thing.

When you get into the technicalities of accounts, the Charity Commission will have a proportionate view of apportionment. It may well be that smaller charities will be excused for making a best guess at things, rather than producing timesheets. Small charities shouldn't treat the Sorp in rigid terms, as large charities do, but should do their best to conform with its generalities without spending too much time on it.

YES - TOM FITCH, director, Community Accountancy Self Help

The software isn't up to it at the moment - unless you want to spend lots of money, it's not designed to do the job. The Charity Commission should have thought about the technology as well.

To meet the regulation, you need timesheets for everything you do, and that adds to the costs. This is moving away from the values of the voluntary sector. We've got a highly educated workforce that is paid less than the private sector, but they want to get the job done. They don't want bureaucracy. Just as the Government is giving greater freedom to local authorities, it's strangling charities with regulation.

The Charity Commission does not realise that the statutory sector asks very small organisations to have audits but does not want to pay for the very detailed work now required. The level of detail a charity audit requires is colossal, and it is four times as expensive as a private sector audit.

Most charities are micro-organisations with turnovers of less than £1m.

To the Department of Trade and Industry, "small" is less than £10m. A giant accountancy firm will spend more on its Christmas party than most small charities spend in a year, and that will go into their accounts rounded up as "entertainment".

NO - MURTAZA JESSA, senior partner, Trustient chartered accountants

The changes highlighted in the Sorp 2005 reflect best practice. Smaller charities are exempt from some of the requirements, but in the main most of the provisions apply to all charities preparing accounts on an accrual basis.

In the first year of implementation, some charities, particularly smaller ones, will find it burdensome because of lack of expertise in-house to implement systems and procedures - and many charities will lack the funds to hire professional help. Overall, charities should see this as an opportunity to rethink the way they account for their activities.

Some of the requirements of the Sorp will allow charities to strengthen their procedures - such as those concerning trustee recruitment and training - thus adding better support from the board. Disclosure requirements will also force charities to think about the difference they make.

We have not found any evidence of good trustees resigning or reluctance from new trustees to join as a result of these requirements. On the contrary, we feel that most charities will see this as positive and that the requirements will assist with good and transparent reporting, making it easier for trustees to fulfil their responsibilities.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus