Statements of Recommended Practice, generally referred to as SORPs, provide recommendations for comprehensive accounting and reporting. In the charity world it is recommended that we follow the Charities SORP (currently Charities SORP 2015).
In the current consultation the SORP Committee sought views on what changes may be needed to the process used to develop the SORP. This includes the advisory SORP Committee which ensures stakeholder engagement and representation in the process.
DSC recommends the following points to be considered in the governance review:
- A vision and mission for the SORP Committee – The Committee should consider what it is trying to achieve above and beyond technical accounting considerations and develop a vision and mission. If one already exists, the Committee should review it. This should consider the Committee’s wider remit and purpose – for example, whether its function goes beyond producing a SORP that correctly integrates accounting rules for the charity sector, to improving charity accounting generally and informing the wider public.
- Composition of the Committee – The Committee needs to incorporate diverse stakeholders beyond the accounting profession. Considering the Committee’s purpose more widely in terms of ‘vision and mission’ could help refine what kind of stakeholders are needed and how they should best participate.
- Consideration for small charities – Thousands of charities are above the £250k income threshold for the SORP but could still be considered ‘small’ – in that they likely have few staff or specialist in-house finance expertise, and much work will be done by trustees. Thousands more will be small CIOs or dual-registered charity/companies, including many below the £250k threshold. Further, grant-makers with relatively large balance sheets may still have low staff capacity and in practice operate as very small charities (for example, many Community Foundations or other local grant-makers would fit this description). The Committee needs to take the needs and viewpoints of these organisations into consideration not only in its decision-making but in its composition.
- Development of the SORP must be seen in the context of open charity data – The SORP is an integral part of the mix of current issues and debates about charity transparency and the provision of data to the public, which are related to questions of public interest and charity effectiveness. The Committee’s work inevitably has an impact on what information and data charities provide to the regulators and how it is provided to the public. The Committee needs to consider how it interacts with and facilitates discussions and decision-making by the charity regulators and other stakeholders about open data – not just between the Committee members.
You can download our full response here.
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