Shake-up of SORP charity accounting committee finalised
17 Feb 2020
Regions and small charities will have more influence over the development of charity accounting rules following an overhaul of the Charities SORP committee but the number of members is barely reduced
17 Feb 2020
The Charity Commission has reduced the size of the committee from 21 to 19 members, who have all been interviewed for positions on the Statement of Recommended Practice (SORP) committee.
The revamped committee will be jointly chaired by three representatives from the regulators.
The joint chairs are Myles McKeown, head of compliance at the Charity Commission for Northern Ireland (CCNI), Nigel Davies, head of accounting at the Charity Commission, who co-chaired the old committee, and OSCR’s Laura Anderson, head of professional advice and intelligence at the Office of the Scottish Charity Regulator (OSCR).
The Charity Commission said the recruitment campaign attracted high calibre candidates from across the board. We would like to thank everyone who took the time to apply – it really is heartening to see such interest in making charity financial reporting better.
Despite calls for the size of the committee to be reduced to maximum 12 members, this did not happen, although there has been a shake-up of the composition of the core membership. There are seven completely new members while seven have been reappointed (see list below).
The overhaul follows criticism that the old SORP committee did not represent the views of smaller charities and the regions, and that charity accounts were being updated too slowly to reflect changes to UK GAAP accounting rules under FRS 102. There were also concerns about weak rules on money laundering and overseas funding.
The SORP committee is responsible for oversight of the accounting rules governing how charities across the UK and Ireland report on their finances. Members are responsible for identifying potential changes to the SORP and advising the charity regulators who make the SORP rules.
The move is part of an attempt to make the accounts of charities more user-friendly for the public, funders and others, and to make preparation easier for smaller charities.
For the first time, the committee will include organisations which work closely with charities and have a working knowledge of charity accounts, as well as greater membership from smaller charities.
The previous committee had been in place for nearly five years and is being reformed following the Morgan review, a nine-month investigation into charity governance and the role of the SORP committee.
At the time, the SORP committee was criticised for its slowness to reflect wider changes to FRS 102 accounting rules, as well as failing to strengthen the weak controls over anti money laundering and crossborder financial oversight of charities.
There were also concerns about the over complexity of reporting for smaller charities and a lack of public confidence in the overall charity sector following the collapse of Cup Trust and Kids Company following financial misconduct, generally reducing public trust in the charity sector.
Morgan also recommended that to improve the effectiveness of the committee, there should be clear role descriptions for the chair and members of the committee, with regular performance evaluations.
The Charity Commission stated that its intention is to improve the process and focus more on those reading and using charity accounts.
McKeown said: ‘The SORP has an important role to play in setting the accountancy standards for charities and, as highlighted by the recent governance review, it is vital the SORP develops in a way that meets modern expectations.
‘One key way to achieve this is to build a committee with as wide a representational viewpoint as possible, in particular from the individuals, groups a and organisations which have practical experience of using the SORP.
In late 2019, interviews were conducted by a panel of representatives from the Charity Commission for England and Wales (CCEW), the Charity Commission for Northern Ireland (CCNI) and the Office of the Scottish Charity Regulator (OSCR), alongside an observer member from the Charities Regulatory Authority (CRA).
The new board includes four members from smaller charities, one funder, one academic, and eight auditors, preparers and organisations. These include:
- Diarmaid Ó Corrbuí (Republic of Ireland)
- Tony Clarke (Northern Ireland)
- Neal Trup (England and Wales) and
- Michael Brougham (Scotland)
- Max Rutherford (Association of Charitable Foundations, England and Wales)
- Noel Hyndman (Queens University, Belfast, Northern Ireland)
Auditors, preparers and organisations
- Daniel Chan (PWC, England and Wales)
- Carol Rudge (Grant Thornton, England and Wales)
- Gareth Hughes (Diocese of Down and Connor, Northern Ireland)
- Tom Connaughton (Charities Institute Ireland, Republic of Ireland)
- Caron Bradshaw (Charity Finance Group, England and Wales)
- Jenny Simpson (Wylie & Bisset LLP, Scotland)
- Joanna Pittman (Sayer Vincent, England and Wales)
- Tim Hencher (Scottish Council for Voluntary Organisations).
The SORP-making body is approved by the Financial Reporting Council (FRC) and its job is to oversee the development of the SORP and its publication, and to ensure that the SORP is consistent with the FRC approved accounting standards.