Charities SORP development process out for review

The Charities SORP Committee is consulting on how best to reform the process for developing the Charities Statement of Recommended Practice (SORP), which sets the accounting framework for charities

The 10-week consultation, overseen by independent chair Professor Gareth Morgan, follows the recent incorporation of the Charity Commission for Northern Ireland into the SORP-making body and the addition of the Charities Regulatory Authority of the Republic of Ireland as an observer.

The goal of reviewing the governance process behind producing the SORP is to test whether the committee is working effectively, including how it engages with the charity sector. The composition of the membership will also be considered.

The Charities SORP has a unique status compared to other SORPs in that it is directly referred to in charity legislation and the guidelines produced by the Charity Commission. For instance, when charities prepare accounts on an accruals basis, they do so in accordance with the methods and principles of the SORP.

The review of the Charities SORP was largely triggered by the resignation from the committee by Joe Saxton, founder of consultancy company nfpSynergy, in autumn 2017. According to Charities SORP committee minutes date 10 January 2018, a resigning committee member had ‘shared a number of observations…which centres on the need for the SORP to place greater focus on the needs of the end users of charity accounts’.

Events in recent years, including several high-profile scandals at charities such as Kids Company, have damaged public faith in the charity sector and its transparency. The governance review will seek to explore how the SORP addresses the transparency and public confidence challenges facing charities in explaining how they spend funds and employ assets.

Judith Hayhow, head of support services at the Office of the Scottish Charity Regulator, said: ‘If the Charities SORP is not right, the accounts that charities produce will not be right for those who need to use them. That is why we as regulators are committed to opening up and inviting feedback on the way in which the SORP is developed.’

The inclusion of a Northern Ireland body is intended as a step towards widening the SORP’s application.

Punam McGookin, head of charity services at The Charity Commission for Northern Ireland said: ‘We are excited to be part of this process to ensure that the charity accounting framework stays relevant and evolves to meet changing requirements to create a high-quality reporting and accounting framework for charities across the UK and Ireland.’

The consultation, issued 26 November 2018, closes for comment on 4 February 2019. 

Guiding the development of the Chariti­es SORP - invitation to comment  

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