Bulletin 2 to the Charities SORP issued following consultation period earlier in the year

On day three of UK Charity Week we have reviewed the key changes and amendments in Charity SORP Bulletin 2 so that you can understand the key areas of change and how it might impact on your Financial Statements.

On 5 October 2018 Bulletin 2 to the Charities SORP was issued following the consultation period earlier in the year. The bulletin is a summary of the changes to the Charities SORP following the triennial review of FRS 102 to ensure the SORP remains FRS 102 compliant.  The SORP committee have not taken the opportunity to make SORP specific changes in this bulletin.

Unlike most other SORPS the Charities SORP has not been re-issued in its entirety and to comply with the Charity SORP fully the original text, Bulletin 1 and Bulleting 2 must be applied together.

Bulletin 2 splits the amendments into 3 distinct categories:

  • Clarifying amendments: to ensure application of the Charities SORP meets the existing requirements of the existing 102. Basically, FRS common areas where FRS 102/ Charity SORP had been consistently misapplied.
  • Significant amendments: changes to the SORP driven by the triennial review of FRS 102 which are considered to have a major impact or to be relevant to a large number of charities.
  • Other amendments: changes to the SORP driven by the triennial review of FRS 102 which are considered to be mainly editorial or to impact a small number of charities.

Key Clarifying SORP amendments:

  • Paragraph 3.49 added to require comparatives for all figures in the Financial Statements.
  • Paragraph 5.52 updated to clarify that corporate gift aid payments from subsidiaries may only be accrued if a legal obligation to pay it exists (usually a Deed of Covenant).
  • Paragraph 10.31 removes the undue cost or effort exemption for depreciating assets with components of differing useful economic lives.

Key Significant SORP amendments:

  • A number of paragraphs in module 10 will be updated to reflect the choice in accounting policy for charities renting property to group companies at either cost or fair value.
  • Module 10 will remove the requirement to disclose the amount of stock treated as an expense.
  • Paragraphs 14.17A and 14.17B will be added to re-introduce the requirement to include net debt reconciliation as a note to the cash flow statement.
  • Paragraph 27.12 will be updated to include the transfer of activities to a subsidiary as an example where merger accounting may be adopted.

Key Other SORP amendments:

  • Paragraph 11.35A will be added which requires charities to make disclosures around risky financial instruments.
  • Paragraph 11.35 is updated removing the requirement to disclose the carrying amounts of financial assets and liabilities measures at amortised cost.
  • Paragraph 24.13A is updated to allow the exclusion of immaterial subsidiaries from being consolidated.
  • Paragraphs 24.314 A – C have been updated to include the choice in accounting treatment of intangible assets acquired in a business combination.

These changes mandatorily apply to all reporting periods beginning on or after 1 January 2019, earlier adoption is permitted providing all the provisions of Bulletin 2 are applied with the exception of the clarifying amendments which should be implemented from 5 October 2018.


The full Bulletin 2 can be found on the Charity SORP microsite here