A charity that prepares accounts using the accrual basis (whether by choice or based on legal requirement) is legally required to prepare accounts in accordance with The Charities Statement of Recommended Practices (FRS102), commonly known as the SORP.
Charities legally required to prepare accounts on accruals basis (and therefore accounts in accordance with the SORP) are those with:
- Gross income greater than £250k and up to £500k
- Gross income greater than £500k or Gross assets less than £3.26m and gross income greater than £250k
SORP Requirements:
The SORP requires charities that prepare accounts on accruals basis to analyse their income and expenditure by charitable activity to show its resources to have been used to further its charitable aims for the public benefit. The information is also required to be further analysed between restricted and unrestricted funds. This detail is provided in a report known as a statement of financial activities (SOFA). Further details about SORP reporting and the SOFA can be found here and templates can be found here. The SOFA must provide a true and fair view of the activities of the charity during the reporting period.
Components of SORP Reports:
A SORP report pack will include:
- Balance sheet that provides a true and fair view of the charity’s financial affairs at the end of the financial year
- SOFA
- Statement of Cash flow
- Notes to the accounts, explaining the policies adopted by the charity and providing further detail the information contained in the SOFA and balance sheet
- Independent examiners report (if gross income is greater than £25k) or a full auditors report, if gross income is greater than £1m or gross asset is greater than £3.26m and income is greater than £250k
Filing Annual Reports:
In addition to the SORP report components stated above (or other financial reports, depending on gross income), a charity is required to file a trustees annual report. This provides details of the charities public benefit activities during the year. Together, these make up a charities annual report.
The annual reports are filed online. In addition to uploading the annual reports charities have to respond to several questions about their activities. Here’s a link to the questions they have to answer for the financial year 2022/23.
Submission Deadline:
All charities are required to submit accounts within 10 months of the end of their financial year e.g. if the charity’s financial year runs till 31 December, accounts will need to be submitted to Charity Commission by 31 October of the following year.
Contact us or book a no-obligation chat via our website www.bancservices.co.uk.if you have any questions about preparing your SORP reports.