The Sorp Revision: Expenditure allocation and grants

By finance expert Don Bawtree

Don Bawtree
Don Bawtree

Although there is a change when income might hit the accounts, there is no change for expenditure: so income might go up, but expenditure should not. The main changes are in presentation.

The Sofa still shows charities reporting by activity, but there are changes to how it looks. Governance costs used to be a separate line, but is now allocated across expenditure like support costs.

Grants expenditure is still included within activities, but the exposure draft suggests that charities should disclose the detail of institutional grants.

The principles of when to recognise grant expenditure are the same, though it is clear that saying you will pay only if the charity has funds available does not avoid booking the cost.

Two other areas of expenditure could change dramatically: if charities choose to put donated stock into their accounts, this would need to be shown as a cost of sale; and if any volunteer time is shown as income, then it would also need to be matched as expenditure.


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