In December 2017, the Financial Reporting Council (FRC) published their first Triennial Review of Financial Reporting Standard 102 (FRS102), being a series of incremental improvements and clarifications developed in response to stakeholder feedback received on the original standard. The updated standard was published in March 2018 and is mandatory for financial periods beginning on or after 1 January 2019, with early adoption permitted.
In response to the changes to FRS102, Charities SORP Update Bulletin 2 was published in late 2018, to bring the existing SORP into line with the revisions to FRS102.
The Update contains three sections: Clarifying Amendments, Significant Amendments and Other Amendments. Early adoption of one or all of these sections is permitted; otherwise they come into effect for periods beginning on or after 1 January 2019. The changes outlined in Significant Amendments section can only be early adopted provided the changes in Other Amendments are also adopted at the same date.
The Clarifying Amendments section sets out the changes made to ensure that the SORP remains consistent with the existing requirements of FRS102. It inserts one additional paragraph regarding comparative information and makes small amendments to other pre-existing sections. There are no new requirements in this section, but rather the purpose is to clarify existing requirements.
The Significant Amendments are those changes brought in by the Triennial Review to FRS102 which are likely to have an impact on the accounts of charities. The section introduces an accounting policy choice which allows charities that rent investment properties to other group entities to measure those investment properties either at cost (less deprecation and impairment) or at fair value. It is also amended to remove the undue cost or effort exemption for measuring the investment property component of a mixed use property at fair value, and include additional guidance on when the different components of the property should be separated. It also removes the requirement to disclose the amount of stock recognised as an expense in the notes to the accounts. Finally, a reconciliation of net debt is now required to be presented as a note to the statement of cash flows, although a comparative period analysis is not required.
The Other Amendments section contains updates that are either editorial in nature, or are considered to be less significant, and likely to only impact a small number of charities.