The consultation on the Exposure Draft of the new SORP closed on 20th June. There are 100 consultation responses published on the SORP microsite: https://www.charitysorp.org/invitation-to-comment

The SORP committee, which includes our partner Joanna Pittman, met twice in August to review the feedback to the consultation and consider the changes proposed in response. As you may expect, key areas of discussion were tiering, the trustees’ annual report, income recognition and lease accounting.

Key takeaways:

The key discussion on tiering was the threshold for tier 1 vs tier 2. There was no consensus gained from the consultation responses on what the threshold should be. There were suggestions for it to be in line with the audit threshold, but the challenge here is that there are different audit thresholds in the four jurisdictions that the SORP applies in. In England and Wales, the current threshold is £1m but there has just been a DCMS consultation to consider increasing it to £1.2m or £1.5m. In Scotland, the current threshold is £500k but the Scottish Government is considering increasing it to £1m. In Northern Ireland, the audit threshold is £500k. So it seems unlikely that a SORP threshold can be aligned with an audit threshold.

There were also concerns raised that a charity could be pushed into a higher tier for one year only due to receipt of a legacy or similar, so there was some support for a two year rule as there is for company reporting. The challenge here is the desire to keep the requirements as simple as possible, so that a user of the SORP can identify the right tier for their charity easily. There were concerns that a two year rule would not be as simple as a threshold for a single financial period.

The committee supported proposals for more guidance and explanations in relation to legacy recognition and lease accounting. It would also be helpful to include a flowchart to help identify the type of lease and how it should be accounted for under the new FRS102 requirements.

The timeline is for final edits to the new SORP to be made in September. The final draft will be reviewed by the FRC (Financial Reporting Council) before can be published. The plan is for the new SORP to be published at the end of October.

The new SORP will be effective for financial periods beginning on or after 1 January 2026. We have webinars available to help you understand and implement the changes and will continue to deliver new webinars and publications to help you meet the new requirements.