Feature / Technical update

Technical update: Support available for new charity accounting framework

After a long period of relativelstability, the statement of recommended practice for the charities’ sector (SORP 2005) is being replaced, writes Nigel Davies. The change to the SORP, which sets out how accounting standards should be applied for the sector, is the result of a new GAAP (generally accepted accounting practice) applying for accounting periods beginning on or after 1 January 2015.

The updated GAAP has three new financial reporting standards (FRS100, FRS101 and principally FRS102) and the continuing, but amended, FRSSE (Financial reporting standard for smaller entities).

There are choices for charities based on their size and this is reflected in the two SORPs that have been developed in preparation for the new GAAP. The charities SORP (FRSSE) provides application guidance for the FRSSE.The charities SORP (FRS 102) provides application guidance for the new FRS 102.

Any charity of any size can follow the FRS 102 SORP. However, only those charities that fulfill two of three eligibility criteria below may follow the FRSSE SORP:?

• Annual gross income of less than £6.5m
• Total assets of less than £3.26m
• Fewer than 50 employees.

Helpsheet 3, available from the dedicated SORP micro-site (see box), considers differences between the FRSSE and FRS 102 SORPs.

In terms of the trustees’ annual report, two changes affect all charities. First, a charity must disclose its reserves policy or it must state it?does not have a reserves policy and give reasons. Second, all trustees who served in the accounting period and/or are in position at the time the report is signed must be named (this will only affect trustee bodies).

There is also a change that affects all larger charities – those required to have an audit. These must provide a description of the principal?risks and uncertainties facing the charity and?its subsidiary undertakings, as identified by the charity trustees, together with a summary of their plans and strategies for managing those risks. For more information on these and other changes refer to helpsheet 2.

Nigel Davies is the Charity Commission’s head of accountancy

 
FT finance data published

The release of more than a million lines of foundation trust financial data will allow foundations to compare their expenditure with that of peers, Monitor said.

The regulator said the data, which is free to download, would also allow armchair auditors to examine foundations’ finances. The information includes staff costs, income and private finance initiative payments.

The data is the raw material from foundation trusts’ annual reports for 2013/14, which has been published in aggregate form by Monitor.

Monitor financial reporting and risk director Jason Dorsett said the initiative made data on individual foundation accounts easier to find and use.

‘Monitor is committed to putting out data in a way that people can use to deliver new insights into the foundation trust sector that will benefit patients. We already make significant use of data, but we want foundation trusts and others to innovate in ways we might not have thought of.’

 
In brief

Monitor and NHS England are putting together 12 local payment examples showing how local areas can adopt payment approaches that support improvement in the quality and efficiency of care, including?through integration. The approaches cover person-centred care for the frail elderly and those with multiple long-term conditions; mental health services; and different risk sharing mechanisms.

Consultation on regulations for health service bodies’ auditor panels and their independence closes on 12 September. The consultation regulations are under the Local Audit and Accountability Act 2014, which abolishes the Audit Commission on 31 March 2015. NHS trusts and clinical commissioning groups will be responsible for appointing external auditors from the end of current audit contracts.

The Health and Social Care Information Centre has a new HRG4 grouper to support NHS England and Monitor’s 2015/16 tariff engagement process.

Monitor has published revised costing guidance, reflecting an updated materiality and quality score collection template.