Proposed new SORP 2015
More headaches for charity accountants!!!
The detailed implementation of the new SORP is becoming clearer, but an EU directive has muddied the waters.
There will be TWO new charity SORPS, being effective for accounting periods COMMENCING on or after 1st January 2015 - that means they will in effect 'bite' for year ends on or after 31st December 2015, in most cases.
However, an EU directive means that one of the new SORPS will have to be revised substantially, probably in 2016, so will only have a short life.
One of the new SORPS will be based on FRS102, and the other will be based on the FRSSE. It is likely that smaller charities will opt for the FRSSE version. Neither can be adopted for accounting periods commencing on 1st January 2015.
The FRSSE based SORP will have to be revised in 2016, with effect, probably, from 2017 in order to comply with EU requirements.
It will not be permitted to use the SORP 2005 (modified in 2008) for accounting periods commencing after 31st December 2014.
The new SORPs have completed the consultation period, and the definitive texts are expected to be available on line from June 2014.
Because comparative figures will be required on the new basis, it would be sensible for practitioners to extract the relevant figures from the last set of accounts prepared on the old basis when preparing the accounts.
This means that it would be prudent for training on the new SORP to be undertaken before accounts ending on 31st December 2014 are finalised - that is to say in spring 2015.
Our associated training company, Branchword Consulting Ltd, will be arranging a programme of courses in early 2015 for this purpose, and their website www.branchword.co.uk should be visited for up to date information.
The new SORPs are modular in concept, so that charities can pick and choose those sections that are relevant to their particular activities. This should make life simpler.
On the other hand, a careful analysis is required of the accounts prepared under the old SORP and the new SORP, as the preparer has to distinguish between 'old type' transactions and 'new type' transactions. For 'old type' transactions', the new SORP requires the former accounting policies to be continued. For 'new type' transactions, the requirements of the new SORP should be followed. This makes life a little less simple!