SORP Trustees Engagement Strand publishes findings and future development plans

13 July 2021

SORP Trustees Engagement Strand publishes findings and future development plans  

The SORP Trustees Engagement Strand has published its feedback report, setting out steps to improve engagement with accountants who are trustees of charities or providers of accountancy services to a charity. The strand is part of the SORP Committee, who in turn advise the SORP making body, helping to maximise financial standards for Charities.

The report, prepared by the Trustees Engagement Strand, explores the benefits, issues and constraints facing trustees in applying the Charities Statement of Recommended Practice (SORP). The SORP provides guidance to preparers of charity accounts, setting out how to prepare ‘true and fair’ accounts in accordance with UK accounting standards, and offering recommendations for charity annual reporting. The strand undertook a survey of trustees to gain their insights from 23 October to 7 December 2020. This report, together with other papers discussed by the Trustees Engagement Strand, formed part of the exploration phase of the future development of the Charities SORP, which lays the foundation for the next phase on reflection and solutions.

Following a governance review in 2018/19, the SORP-making Body undertook to engage more broadly with such parties, recommending that engagement should be an ongoing process not just linked to consultations, with views fed in at all stages of the development process. As one of six engagement strands created in July 2020 for this purpose, the Trustees Engagement Strand, comprising members including Anne Davis of the Institute of Financial Accountants (IFA), helped gather and share views from the charity sector on the Statement of Recommended Practice, to inform the work of the SORP-making body and the SORP advisory committee.

Anne Davis, Director of Professional Standards at the IFA and Trustees Engagement Strand member said: “We hope that the findings of this survey highlight the experiences of trustees in trying to use and comply with the Charities SORP, and are useful for the SORP Committee and SORP Making Body in their deliberations on the future development of the Charities SORP.”

The findings from the Trustees Engagement Strand were shared with the SORP Committee over two meetings in February 2021. The SORP Committee, which advises the SORP making body, reflected on suggestions from the various engagement strands and identified 15 topics for review throughout the remainder of the year. In addition, some suggestions relating to the application of section 1A FRS 102 to profit and public benefit entities, greater flexibility in the presentation of the Statement of Financial Activities (SOFA) and disclosure notes were discussed by the SORP Committee in April 2021, as part of its proposed SORP-making body submission to the FRC. 

The next stage for the development of the SORP involves the Trustees Engagement strand considering the changes needed as part of the reflection and problem-solving stage of the development of the new SORP. A number of meetings have been planned for the rest of the year to discuss the 15 topics which have been prioritised. Key topic areas to be considered are: summary financial information/key facts page, impact reporting, sustainability reporting, reserves, support costs, expenditure classification, activity reporting, accruals accounting for grants, donated goods and services, income recognition, legacies, presentation of the SOFA and notes on financial information.  

At the same time, the Financial Reporting Council’s (FRC) periodic review of FRS102: The Financial Reporting Standard applicable in the UK and Republic of Ireland is underway. The FRC is seeking views by 31 October 2021 on new issues and transactions that need to be addressed, suggestions on current requirements and developments on financial reporting and the wider reporting framework. Further details can be found here.

The SORP Trustees Engagement Strand trustee questionnaire feedback report can be viewed here and the SORP microsite here.

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Notes to Editors:

Established in 1916, the Institute of Financial Accountants (IFA) is part of the Institute of Public Accountants (IPA) of Australia Group, the world’s largest SME-focused accountancy group, with 40,000 members and students in 80 countries.

Our members work within micro and small- to medium-sized enterprises (SMEs) or in micro and small- to medium-sized accounting practices (SMPs) advising micro and SME clients.