Moore Kingston Smith SORP response
The changes to the Financial Reporting Standards have set the tone for the significant changes to the SORP, but it was also an opportunity to evolve and enhance it. The Charity Commission’s consultation concluded on Friday 20 June 2025, and while we at Moore Kingston Smith welcome the proposed changes, we believe further refinements are needed to ensure the SORP is more compatible and proportionate to the size of Charity.
For example, with regards to the proposed tier system, we believe these should be aligned to the audit thresholds. Additionally there is an opportunity for a fourth tier to bridge the gap between charities with a £500,000 turnover and those with a £15 million turnover. The gap is significant and introducing a further tier would relieve the reporting requirements for smaller charities.
The most significant change to charity accounting will be the treatment of leases which will be bought onto the balance sheet for the first time. There is still uncertainty on how to deal with the value of peppercorn leases, leases deemed in part as social donations and rents below market value – all common occurrences in charities; income recognition in areas such as legacies still lends itself to inconsistent accounting between charities. If the Charity Commission is striving for greater consistency across the sector, detailed examples on how to account for these transactions would be welcomed.
Introducing prompt questions for the Trustees report will ensure minimum expectations and standards and promote consistency. An updated glossary with clearer clarifications, increased bandings for salary disclosures and alignment of the SORP with FRS 102 in areas such as related party disclosures for wholly owned group entities are all areas that we have suggested need updating.
Most of us use AI in our everyday lives and we believe it has a role to play in improving the user experience for navigating the SORP, which is likely to be in excess of 300 pages once published.
Our response to the consultation was positive and collaborative, aiming to help drive better standards and consistency of reporting across the sector. The revised SORP is expected to be published in October 2025 and will take effect for periods starting on and after 1 January 2026.
Please join us in person on 20 November 2025 Invitation: Charities sector update 2025 for a practical approach to the SORP hosted at our office in the City of London.
