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Make the most of the new SORP

21st Aug 2014
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A Cloud-based ERP solution for mid-market organisations

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If you are a Registered Charity or a Not for Profit organisation with an income greater than £6.5m and your accounting period starts on or after January 1st 2015, sooner than you might think, you will have to conform to a new set of SORP requirements. 
 

Should you require to compare last year’s figures with the current year ones, you will need to adopt the new SORP (Statement of Recommended Practice) reporting format earlier than the beginning of 2015. Otherwise the numbers simply won’t correspond.
 

The new standards are based around  FRS 102 (Financial Reporting Standard 102) which brings together a whole range of differing standard guidelines for Charity accounting into a single unified and consistent reporting method.
 

That’s not all though, as well as FRS 102 - there is an existing accounting standard for smaller charities called the Financial Reporting Standard for Smaller Entities (FRSSE) which you also may need to take heed of.
 

One of the main changes in FRS 102 is a move to 'fair value' as the basis for financial transactions and balance valuations. Other additional changes in the new SORP are listed below:

  • All entities have to prepare a Statement of Cash-flows.
  • Income including legacies may be recognised when their receipt is 'probable' rather than certain.
  • All charity accounts have to include a statement regarding its condition in terms of being a going concern, either explaining any material uncertainties or risks to cast doubt on it or the factors that support it.
  • All charities must disclose the total amount of employee benefits received by 'key management personnel' for their services to the charity – this applies to any senior manager.
  • All charities must disclose the fact that there were no employees who received pay over £60,000 or if there were disclose the number of employees remunerated above £60,000 in bands of £10,000.
  • Charities are encouraged to disclose their remuneration policy in the trustees' annual report.
  • Gains and losses on investment assets should now be treated as part of general income or expenditure and therefore, be reported 'above the line'.
  • Governance costs are no longer shown as a separate row in the Statement of Financial Activities (SoFA) but must be disclosed in the Notes.
  • Comparatives are required for each column of the SoFA, but may be provided again in the Notes to the accounts.
  • Material items should be disclosed separately in the accounts, as should extraordinary items.

Using Aqilla will make it easy for charities to transition to the new SORP arrangements. Existing users benefit from the single combined ledger and a simple structure which makes highly flexible chart of accounts. This means that any changes, including the new SORP, can be adapted easily and without the need to ‘upgrade’ or ‘update’ the software. It also means that there is no need for expensive consultants time in setting up the new codes. 

Of course, the easiest solution is to ensure your back office finance and accounting solution are linked to all the other essential tools used by modern charities, including point of sale; membership; subscription; donation management and CRM systems, as well as those taking account of timesheets or employee and volunteer expenses. Capture the correct information once and the new SORP reporting requirements should flow from that saving you time, effort and money.

For More About Aqilla visit:   http://www.aqilla.com/

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