What are the SORPS? What is FRS102 SORP, and FRSSE SORP?
 
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What are the SORPS? What is FRS102 SORP, and FRSSE SORP?
January 4th, 2016     A+ | a-

Accounting standards are set on an International Basis, and implemented in the UK by the Financial Reporting Council, (The FRC). Accounting standards lay down how different transactions should be accounted for and reported upon, so that any set of accounts can be compared on a ‘like for like’ basis with any other set of accounts.

Standards issued by the FRC have the force of law in the UK under company law, and other legislation.

The FRC have issued two accounting standards, which came into force for accounting periods beginning on or after 1st January 2015. These are the FRS102 and the FRSSE.

FRS means Financial Reporting Standard, and FRSSE means Financial Reporting Standard for Smaller Entities.

Statements of Recommended Practice (SORPs) are sector-driven recommendations on accounting practices for specialised industries or sectors which supplement accounting standards and other legal and regulatory requirements in the light of the special factors prevailing or transactions undertaken in a particular industry.

Charities have two current SORPs which apply for accounting periods beginning on or after 1st January 2015, namely the FRS 102 Charity SORP 2015 and the FRSSE Charity SORP 2015.

Normally a SORP would have the force of law, but due to a delay in passing the statutory regulations, in England & Wales (but not Scotland), the 2015 SORPS do not have the force of law, at the time of writing in January 2016. The required regulations are anticipated shortly. However, accounts must be prepared according to the SORPs in order to comply with accounting standards.

Matters are further complicated by the fact that the EU has ruled that the FRSSE is not compatible with European Law. The FRSSE is therefore to be withdrawn for accounting periods commencing on or after 1st January 2016. This means that the FRSSE SORP 2015 will be similarly withdrawn.

For most charities, accounting periods commencing on or after 1st January 2016 will affect accounting year ends on or after 31st December 2016. By that time a new framework will be in place to amend the SORPs 2015.

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