Next Charities SORP and FRS102
The Financial Reporting Council has produced a project update on the next FRS102. The timeline for its application has moved from the accounting period beginning on, or after, 1 January 2025 to 1 January 2026 at the earliest; this being a year later than FRED 82 originally proposed.
The delay on the FRS102 comes as welcome news as the Charities SORP has not yet been issued for consultation; this we are expecting in 2024 with a short 12-week consultation period and plans to have a final version issued by the Autumn/Winter 2024. This means, however, that there will be little time for the charity sector to consider and debate the next SORP if only a 12-week consultation period takes place.
We ask all charities to be prepared for the SORP review in 2024 so that you can review the commentaries that will be produced on the changes planned. This includes our own commentary and events, to please issue feedback to the SORP making body. It is evident from the FRS102 process that the final version will be updated by the FRC with the comments they have received.
The FRC response to FRED 82 says “We are preparing final amendments for issue, taking into account the responses received. The final amendments are likely to differ in a number of respects from the FRED 82 proposals; the basis for conclusions will explain our key judgements and decisions.”
By providing feedback on the proposed changes by the Charities SORP, we can ensure the changes remain relevant and effective.
From the project update from the FRC on the next version of FRS102, it is clear that the proposed alignment with international standards on the five-step model for contract income recognition and for all leases, including operating leases being recognised on the balance sheet remains.
However, there are indications that the FRC are considering exemptions on the size criteria to which the requirements will apply; instead making the requirements more proportional, as well as looking to clarify recognition exemptions on low value leases.
The final version is due to be issued in the first half of 2024.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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If you would like to discuss the potential impact of the proposed changes to the FRS102 or the Charities SORP, please contact one of our specialist team.
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