Changes to the Charities SORP

Category: Charities - Posted On: Mar 15 2016

On 2 February 2016, the Charities SORP Committee issued Update Bulletin 1. It was always intended that the Charities SORP (FRSSE), an option for smaller charities issued at the same time as the Charities SORP (FRS102), would only have a life of one year.

All indications late last year were that there would be no replacement and all charities preparing their accounts on an accrual basis would have to adopt the Charities SORP (FRS102)

Update 1 confirms this and makes amendments to the Charities SORP (FRS102) with effect for accounting periods commencing on or after 1 January 2016. Early adoption of the amendments for reporting periods beginning on or after 1 January 2015 is permitted providing that all the amendments to the SORP relevant to the charity, are effected. The changes are as follows:

  • The definition of a ‘larger’ charity is one whose income exceeds £500,000.
  • A cashflow statement is only required for a larger charity.
  • The definition of a related party is extended to include key management personnel services provided to/from the charity by another entity.
  • Capitalised goodwill must be amortised over no more than 10 (previously 5) years where its economic life cannot be reasonably determined.
  • An impairment loss for goodwill must not be reversed in a subsequent accounting period.
  • The carrying amount of the stock of goods donated for distribution to beneficiaries should be subsequently adjusted to reflect the lower of deemed cost, adjusted for any loss of service potential, and replacement cost.
  • Charitable companies will no longer be able to apply merger accounting to business combination with a third party.

To read the full bulletin, go to