Accounting and Reporting by Charities | The Almshouse Association

In preparing charity financial statements, trustees are required to follow the methods and principles of Accounting and Reporting by Charities: Statement of Recommended Practice (SORP). Periodically the Charities SORP is updated to reflect changes to UK Accounting Standard FRS 102.

On 28 March 2025 the SORP-making body launched its public consultation on the next version of the Charities SORP. The new version incorporates two significant changes in relation to lease accounting and revenue (income) recognition.

Under the new SORP, all leases, including most operating leases (e.g. property leases, car leases) will be on the balance sheet. As a result, there will be an increase in recorded assets and liabilities on the balance sheet.

Also, under the new SORP, there will be a new revenue recognition model to be applied. This will establish when income can be recognised in a charity’s books.

For many charities, the new SORP will have little effect on their reported numbers, but for others, the effect may be significant. We would recommend discussing with your independent accountants or auditors whether any change to your reported numbers is likely under the new SORP and what work will be required to comply with the new SORP.

Further details can be found here: Home – SORP

The SORP-making body has invited comments on this latest Exposure Draft SORP. The deadline for comments is 20 June 2025 and further information can be found here: Invitation To Comment – SORP

The new SORP is expected to be effective from January 2026.

posted April 2025