The Sorp Revision: Principles, errors, formats

By finance expert Don Bawtree

 Don Bawtree
Don Bawtree

Charity accounts will look similar under a new Sorp, but there will be changes to look out for. The balance sheet and notes will look much the same and the cash-flow format will change; the more dramatic changes are to the Sofa.

The Sofa has been simplified - hooray! Out has gone the lexical nonsense that plagued the last version, replaced by plain English such as "income" and "donations".

Investment gains or losses - whether from sales or market valuation movements - all need to sit together on the Sofa and form part of income and expenditure. There is no choice about this, but there are ways to do it that should be debated. Income will now be brought into the accounts when it is "probable", not "almost certain". The Sorp has not thrashed out all the implications yet.

From now on, errors that are material and affect previous years will require last year's figures to be restated. This used to be quite uncommon as the error needed to be more serious than just material. We will see many more accounts being restated as a result.

Topics:
Finance Advice

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