Transition to SORP FRS102: Are you ready?

The new charity SORP FRS102 is effective for December 2015 year ends onwards and to ensure the process is as smooth as possible you need to prepare now. Philip Griffiths explains how to make sure you’re ready.

The information required for the Trustees’ Report needs some thought now. The main areas affected are:

  • Reserves policies - you must state the amount of reserves and why they are held.
  • Risk management - a description needs to be given of the principal risks and uncertainties facing the charity and a summary of the plans and strategies for managing these.
  • Going concern - the nature of any uncertainties that exist at the sign off date need to be given.
  • The arrangements for setting the remuneration of the key management personnel and any benchmarks, parameters or criteria used needs to be disclosed.

There are new formats for the SOFA and cash flow statement which means that the comparative information needs to be given in the same format. In addition, there is now a requirement to show
comparatives for each column of the SOFA. This can be done either on the face of the SOFA or in the notes to the accounts and will help readers of the accounts of charities, with multiple funds, to understand the performance of the charity in comparison with the previous year more easily.

The accounting policies that you use at the date of transition may differ to those used previously. Any adjustments required arise from transactions, other events or conditions before the date of transition and therefore the adjustments are recognised directly in opening funds at the date of transition as though you had always applied SORP FRS102.

In summary, you need to:

  • Identify your transition date.
  • Review all assets and liabilities at the transition date to identify
  • those that will be recognised for the first time (e.g. holiday pay accruals, liabilities under multi-employer defined benefit pension schemes)
  • those that are not permitted to be recognised
  • those that need to be reclassified (e.g. operating leases, freehold property)
  • those that need to be re-measured (e.g. fixed assets at deemed cost).
  • Identify the areas where restatement is prohibited.
  • Select any exemptions available.
  • Prepare and present the required reconciliations and disclosures.



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