Technical SORP Update

An update Bulletin detailing amendments to SORP for charities applying FRS 102 was published on 2 February 2016. The bulletin covers changes to the SORP to bring it into line with underlying changes in FRS 102 and is effective for periods beginning on or after 1 January 2016.

It may however be early adopted for periods beginning on or after 1 January 2015 which is especially beneficial to small charities who are now able to adopt the FRS 102 SORP without producing a cash flow.
The most significant changes in the amendment include:

  • It confirms the definition of larger charities as “charities with an income of over £500,000”, rather than being linked to the moveable audit threshold.
  • Only larger charities will be required to prepare a statement of cash flows.
  • Revision of the maximum period over which goodwill and other intangible assets may be amortised from five to ten years.
  • The reversal of historical impairment losses for goodwill has been prohibited.

While the bulletin acknowledges the withdrawal of the FRSSE it doesn’t state that charities falling within the small company regime are not allowed to use the FRS102 section 1A disclosure exemptions.  However, in reality the 1A exemptions would be of limited benefit as the SORP requirements have force of law and would specifically require much of the exempted disclosure.

For more information please contact Laura Masheder