The next SORP. I know that most charities don’t want to even think about it, but the fact is that the SORP 2015 will not last forever. Soon the Financial Reporting Council will be considering what the changes are to be made to the FRS (Financial Reporting Standards) and a new one will be unveiled in 2019.
Quite rightly, the SORP-making bodies are considering how charities will be affected and how we can shape the main FRS framework from which the SORP will be derived. So it has launched its own SORP research consultation to gather views. As my colleague Heather McLoughlin has discussed on this blog previously, CFG is going to be channelling the views of our members and we are hosting a number of events across the country including:
However, already from our first meeting in London a number of key themes have emerged:
1. Charities are concerned about adding complexity to the SORP
The SORP consultation is looking to add a number of additional disclosures around anti-fraud controls, naming big donors, breaking down spending by country, explaining why your charity is a going concern etc.
The Charity SORP is already nearly 200 pages long, and many charities expressed concern that the SORP may become too complex for external stakeholders to understand.
A number of challenges to the SORP-making bodies for the new changes were levelled at the meeting: What value do these additional disclosures add to an understanding of a charity? Will they lead to any positive behaviour change or just lead to the SORP growing ever larger?
2. What is the point of a key facts summary?
Not a single charity present wanted to see the return of a Key Facts Summary. Many questioned what the point of it would be, given that there are no clear comparisons that can be made between charities and a Key Facts Summary could only encourage a simplistic and partial understanding of a charity.
There is an almost universal consensus amongst charities that this shouldn’t be introduced. Let’s see if the SORP-making bodies listen.
3. Support costs should be dropped
Although a lot of the SORP consultation is about addition, there is a proposed simplification in dropping the need to separate out ‘support costs’. Out of a room of around 50 participants, only a handful said that they wanted to keep ‘support costs’ separate. Most believed that this was an unhelpful separation and that it fed a perception that support costs were ‘bad’ or ‘unnecessary’ to the work of charities.
There is still time for you to have your say
The critical thing for charities is that they have their say now, on what the next SORP looks like.
It will have a big impact not only on the work of charity finance professionals, but also on how our sector is reported on and perceived in the years ahead.
If you haven’t booked to attend one of our events, please do so. Otherwise, there is a real danger that we may not like the look of the next SORP.