Most opposed to 'free-form' accounts for small charities

Charity Commission says research contradicts anecdotal evidence

Charities are not in favour of giving more freedom to small organisations in the next Statement of Recommended Practice, research by the Charity Commission has found.

About 60 per cent of charity accounting experts responding to commission research said they did not want more "free-form" accounting for small organisations involving less requirement to follow the Sorp, which gives charities guidance on how they should set out their annual reports and accounts. Only 19 per cent backed more freedom for small charities.

In a presentation to the Charity Finance Directors' Group conference last week, Ray Jones, head of accountancy policy at the commission, admitted he had been surprised by the raw data.

"Anecdotally, what I had heard was that there was an appetite for more freedom for small charities," he said. "But this is not what we've found in our questionnaire."

People had often told the commission that because many small charities struggled to understand the Sorp there was little point in trying to force them to follow it, said Jones.

The research, which included 27 focus groups and more than 600 questionnaires, also revealed that existing accounting requirements for multi-year grants were unpopular.

At present, if a grant maker promises to give a multi-year grant, all of it is recorded on the balance sheet in the year the promise is made.

However, nearly two-thirds of charities said they believed this was not the correct way of handling the records, with many saying that money should be accounted for when it was paid.

About three-quarters of charities said they believed they needed to be more balanced in their report- ing and more willing to admit their mistakes.

"Some people have said to me that if they report that something has gone wrong, they get praise rather than blame," Jones said. "There is an indication that reporting mistakes is effective, and we believe charities should show more balance."

One other strong conclusion, supported by more than three-quarters of respondents, was that charities should not try to express the value of their volunteers in monetary terms. Only 10 per cent disagreed.

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