Majority of small charities feel burdened by not-for-profit accounting rules, survey reveals

Charity accounting rules and regulations should be “tailored to the size” of the organisation, a major survey has revealed.

The finding forms part of the annual Charity Finance Charities SORP Survey, which highlights the state of charity accounting practices each year.

Small charities burdened by Charities SORP

According to the report, more than two in three (68 per cent) charities agree that the Charities Statement of Recommended Practice (SORP) is “fit for purpose”, while just under a third (32 per cent) disagreed with this statement.

When only including small charities, however, the number of organisations who agree that the accounting rules are “fit for purpose” fell to an alarming 29 per cent.

What do charities want from the Charities SORP?

When asked why the Charities SORP was not fit for purpose, the majority of small charities agreed that the ‘one size fits all’ accounting rules placed an unnecessary burden on the smallest of organisations.

As a result, some 29 per cent of all charities said they would like to see the SORP tailored to size in the next edition of the rules. This increased to 50 per cent among small charities.

In addition, one in five (21 per cent) charities would like to see the inclusion of FRS 102 sections so that the Charities SORP and FRS 102 “do not have to be referred to separately”.

A further 13 per cent said they would like to see more guidance on complex issues such as environmental reporting, while nine per cent would like to see example layouts. Sector-specific guidance, the removal of comparative reporting, and receipts and payments (R&P) accounting were also popular requests.

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Posted in Blog, Charities.