Charities SORP (FRS 102)

cover - SORP FRS 102


The Charities Statement of Recommended Practice (SORP): Accounting and Reporting by Charities provides guidance for charities preparing accounts on an accruals basis. The Charities SORP (FRS 102) is one of two new SORPs developed and supports the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102). The FRS 102 SORP may be followed by any charity apart from those required to follow other SORPs. However, in general, charities that would qualify as a small company or fall within a small group had they been incorporated in company law, can opt to follow either the FRS 102 or the FRSSE version.




Oct 2014


Charity Commission/OSCR


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Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2015)


The Charities SORP (FRS 102) is based on new GAAP and supports the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102). It applies to financial years beginning on or after 1 January 2015.

Whilst the Charities SORP (FRS 102) shares some of the same requirements as the Charities SORP (FRSSE) there are a number of areas where the two SORPs are different as one is based on new UK GAAP in FRS 102 and the other on the FRSSE (ie “old” UK GAAP).

Charities SORP (FRS 102) introduces a number of significant accounting policy and guidance changes including: 

  • a revised Statement of Financial Activities including amendments to headings and a ‘plain language’ style
  • income recognition criterion
  • recognition of income from legacies using a portfolio approach
  • recognition of donated goods for resale or distribution
  • recognising income under the UK retail gift aid scheme on an estimated basis
  • identification of onerous contracts
  • a liability in relation to paid annual leave and sick leave
  • differentiation between ‘basic’ and ‘other’ financial instruments
  • the application of a total return approach to investments (England and Wales only)
  • new class of social investments and mixed-motive investments
  • incorporated charities are specifically prohibited from being treated as branches
  • The use of and criteria for merger accounting
  • equity method now used for consolidating joint venture entities
  • definition of de-facto trustees
  • revised definition of related parties.

Charities SORP (FRS 102) also provides a flow chart to assist preparers with the accounting requirements for charity combinations and a new format for the statement of cash flows including a new template for illustrative purposes.

For information on choosing the SORP for your charity you should consider the guidance on the Charities SORP website and if necessary, take their own professional advice.

This publication is available in hard copy. A PDF version can be downloaded from

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