Final charities SORP gives sector clarity over reporting requirements
Commenting on the final Charities Statement of Recommended Practice (SORP), Hannah Catchpool, Partner and Head of Not for Profit at RSM UK:
“Charities now have the clarity they need on reporting requirements following the publication of the final version of The Charities SORP 2026. These changes represent a huge shift in financial reporting for the sector and should not be taken lightly. The onus is on the charities themselves to ensure they follow the new requirements relating to the five-step model for revenue recognition and the revised lease accounting model.
“It’s a missed opportunity to not increase the tiered reporting thresholds for smaller charities, meaning many of these charities will get dragged into significantly more onerous reporting requirements. It’s also disappointing that the disclosures for higher paid staff continue with a starting benchmark of £60,000 which is the same figure introduced in the 2005 SORP more than 20 years ago.
“The SORP should give greater transparency over financial statements, which will be hugely beneficial for donors, funders and regulators. The inclusion of lease liabilities on the balance sheet will also provide a more comprehensive overview of a charity’s financial obligations, leading to more informed and strategic decision making as well as clarity for other stakeholders. However, with this comes increased complexity and implementation costs, which will undoubtably hit smaller charities the hardest.
“The changes apply to accounting periods commencing on, or after 1 January 2026, with early adoption permitted but it is expected the majority of charities will adopt for December 2026 year ends onwards. The first steps for most charities should be to review leases and contracts as soon as possible to identify the potential implications and plan ahead so there is sufficient time to make any necessary transition adjustments. Enhanced record keeping will be hugely important, as well as educating the board and finance teams so they are up to speed with the new reporting requirements.”