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ACF welcomes review of Charity SORP Governance

There should be greater representation from funders in the development and governance of the Charities Statement of Recommended Practice (SORP), according to an independent review published today by the UK and Ireland's four charity regulators. 

It makes a number of recommendations under five key themes, including that:

  • The needs of the wider public and beneficiaries require a refocusing of the SORP and greater simplification of reporting requirements for smaller charities
  • The SORP Committee should be retained but reforms are needed regarding size, composition and clarification of the respective roles of the SORP-making body and SORP Committee.
  • Broader and ongoing engagement is needed with a much wider group of stakeholders if the SORP is to continue to be fit for purpose.
  • The sector and charity regulators should collaborate to identify and codify best practice in non-statutory financial reporting.
  • The SORP-making body, supported by the Financial Reporting Council (FRC) needs to ensure that the redesigned SORP development process takes effect.
  • The charity regulators are asked to ensure that SORP process is adequately resourced to implement these recommendations.

Specifically for funders, it recommends that those who give to, or fund, the charity sector should be recognised as key users of accounts and therefore should be more greatly involved in the development of the SORP:

"Charity financial reporting must pay more attention to the users of charity reports and accounts. The key users, whose needs should be central to financial reporting by charities, are: proxies who best represent the public and beneficiary interest whose needs should enjoy a greater prominence in the process trustees who need to explain their charity’s activities to those interested in the work of their charity and the wider charity sector, and those who give to, or fund, the charity sector"

It notes that many respondants to the consultation highlighted the importance of engaging with external stakeholders from across the charity sector in the development of guidance on charity accounting:

"In particular, there was a desire that greater steps are taken to broaden engagement including working groups or sub-committees, focus groups, outreach events and direct dialogue with funders, donors, umbrella bodies and larger charities."

The review also recommends that key experts including donors and funders should form a quarter of the 16 full members of a future Advisory Committee. 

Max Rutherford, ACF’s Head of Policy, said:

“We welcome the publication of this review, which addresses a number of points that ACF raised in its submission. It is particularly pleasing to see the users of accounts given greater consideration, an explicit recognition of grant-makers as a primary audience, and a move towards a more representative advisory committee that will see funders and donors given greater prominence. In addition, a commitment to increased consultation going forward will ensure that we can continue to work towards a SORP that meets the evolving needs of all of its constituent readers and stakeholders.

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