Charity SORP: Regulators should go further to ensure proportionality in reporting for charities

With the Statement of Recommended Practice: Accounting and Reporting for Charities (SORP) closing this Friday (20 June), RSM UK supports the move to a three-tier reporting framework but calls for regulators to go further in promoting proportionality and providing greater clarity.

Nick Sladden, partner and head of charities at RSM UK, said: “While the three-tier reporting framework is a positive step towards supporting proportionality, some areas of the SORP currently fall short of that goal. The proposed tier 1 threshold of £500,000 feels too low and risks putting additional burden on smaller charities. We’d encourage the charity regulatory bodies to consider lifting this to at least £1m, in line with the existing audit threshold, or even further to £2m if the threshold is increased following the recent DCMS consultation. It’s also essential these thresholds are reviewed regularly to ensure they remain appropriate.

“We support the enhanced governance disclosures set out in the SORP but would encourage alignment between these requirements and those set out in the Charity Governance Code. By maintaining a joined-up approach with the Code, this will ensure consistency in reporting. Although the requirements of the Code are not currently mandated, by referencing its existence in the new SORP it should enhance its uptake.

“Further steps to enhance the quality of reporting could include updating the existing model annual reports to reflect the requirements of the new SORP, as well as providing practical guidance such as examples of good practice on an annual basis.

“The SORP clearly sets out which reporting requirements apply to each tier, which should make it straightforward for charities to decipher which they must adhere to. Overall, we support the reporting requirements and believe they are proportionate to the needs of charities of varying sizes for the most part, but would encourage some adjustments are made to avoid a scenario where significantly more onerous reporting requirements are triggered, particularly for those on the smaller end of the spectrum.”