New SORP, FRS 102 and threshold changes
Major changes to FRS 102 are now in effect. Following the Financial Reporting Council’s 2024 Periodic Review, the Charity Commission released the revised SORP on 31 October 2025, and this is now effective for periods starting on or after 1 January 2026. The first charities to be impacted by these changes will be those with year-ends on 31 December or short periods, and as such, our charity clients need to consider these changes now.
New SORP 2026
The revised SORP introduces updated rules for revenue recognition, lease accounting, the Trustees’ Annual Report, and other financial statement presentations. The introduction of Tiers also adds to the complexities of what needs to be reported within the accounts. These changes will likely have a material impact on your accounts, and consideration will need to be given to revenue recognition and leases, which will need to be brought onto the balance sheet.
We can help you implement the changes smoothly, ensure compliance, and understand what it means for your organisation.
Threshold changes in charity law
Alongside the significant SORP 2026 changes above, the sector will need to consider recent amendments by the Department for Culture, Media and Sport to a number of important thresholds, as some organisations may be reclassified as a medium or large organisation, which would result in more onerous reporting requirements.
Conversely, following the increase in audit thresholds outlined in the Consultation on financial thresholds in charity law: government response, some charities may no longer require an audit and may instead fall within the thresholds for an Independent Examination. We have a specialised team that can support and advise you if you need to transition to the Independent Examination regime.
How Moore Kingston Smith can help
As one of the leading firms auditing and advising the charities sector, we are already helping our clients understand the difference between exchange and non-exchange revenue streams, lease calculations, some of which have a social donation element, and dealing with issues of jumping between tiers.
We will be providing regular updates on this page throughout the year with guidance, best practice and FAQs. Please get in touch with your primary contact at Moore Kingston Smith for guidance on navigating all of these changes.
