A public consultation on the next version of the charities accounting and reporting framework has been launched, with three tiers based on income levels proposed.
The Charities Statement of Recommended Practice (SORP) has been updated to reflect changes introduced by the Financial Reporting Council (FRC) to FRS 102, the financial reporting standard applicable in the UK and Republic of Ireland.
In particular, it reflects changes to how charities will need to recognise certain types of income and certain types of leases in their accounts.
The SORP-making body has also proposed ways to make the framework more straightforward to navigate for charities, and to improve information for beneficiaries, donors and the public about how charity resources are stewarded.
These proposed changes include:
- Introduction of three tiers based on income levels to ensure proportionate reporting, while also meeting the information needs of users.
- Advancing reporting in important areas such as impact reporting, reserves, going concern and volunteers.
- Introduction of proportionate reporting for environmental, social and governance issues.
Charities, their trustees, employees and beneficiaries have been asked to share their views on the draft changes by 20 June.
The feedback will help shape the final version, which is expected to be published in autumn 2025 and effective from January 2026.
‘Take action now to prepare for the upcoming changes’
The joint SORP-making body comprises the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland. The Charities Regulator for the Republic of Ireland is an observer on the SORP-making body.
David Holdsworth, chief executive of the Charity Commission for England and Wales, said: “This new draft has been developed through extensive engagement with experts including through the SORP Committee, and can be improved further through this formal consultation.
“I really encourage charities and others with an interest or experience to give us their feedback.”
Katriona Carmichael, CEO of the OSCR, said: “The exposure draft SORP has been developed by experts in charity finance to ensure that charities can keep up with developments in modern financial reporting.
“It’s with this in mind that I’d encourage charities applying the SORP and others to contribute to this consultation process, and take action now to prepare for the upcoming changes in accounting standards that are reflected in the exposure draft SORP.”
Frances McCandless, CEO of the Charity Commission for Northern Ireland, said: “This consultation is a key opportunity for those who use the SORP to shape its future.
“With implementation approaching in January 2026, and as FRS 102 will not be changing, now is also the time for charities to start thinking about how they can be ready to report under the new standards.”
The SORP-making body says it is also keen to hear the views of preparers, auditors and independent examiners as well as others who may use charity accounts including donors, funders, financial supporters and other stakeholders.
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