SORP provides a framework and sets standards for accountants preparing accounts for charities. SORP is the statement of recommended practice on accounting and reporting for charities which prepare their accounts on accruals basis. The purpose of preparing accounts is to provide useful information for decision making process of the board, funders and other external stakeholders, charities should prepare accounts at least annually.
- The statement of recommended practice is applicable to charities preparing their accounts in accordance with the financial reporting standard applicable in UK.
- The Statement of recommended practice is relevant to charity auditors, independent examiners and accountancy practitioner who are involved in the scrutiny of charity accounts.
- SORP is recommended for charity accounts because
- It improves the quality of financial reporting by charities.
- It enhances the relevance, comparability and understandability of the information presented in charity accounts.
- It provides clarification, explanation and interpretation of accounting standards and their applications to charities for specific transactions.
- It assists those who are responsible for preparing trustees’ annual reports and accounts.
- A SORP must carry a Statement by the FRC confirming.
- SORP does not appear to contain any fundamental points of principle that are unacceptable in the context of current financial reporting practice, auditing practice or actuarial practice.
- Our extensive experience in the not for profit sector has provided us with a wealth of knowledge in reporting under SORP.
- We aim to make the transition to SORP as smooth as practicable and provide precise advice for best practice reporting.
- We provide a complete service for the conversion of financial statements, ensuring full compliance with SORP and best practice in the sector
- The SORP has a number of core modules to which all charities must refer when preparing their accounts and trustees’ annual report. Supplementing these core modules, there are additional modules that apply only when a charity:
- Undertakes a specific type of transaction;
- Needs to recognize, measure or disclose a specific asset or liability in a particular way;
- Has particular forms of investment; or
- Adopts a particular legal form or group structure.
- When preparing their accounts, charities must refer to the index of modules to ensure that they identify all of the SORP’s recommendations that apply to their transactions, assets and liabilities.
The SORP also offers advice on how a charity may disclose particular issues and provides examples or suggested layouts of particular notes which a charity may choose to follow