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After a delay due to a technical issue the Charity Commission has now opened its online system for submitting annual returns. The system was originally scheduled to go live towards the end of April. But due to the delay it was not released until 5^th of May.

What is a Charity Annual return?

A charity annual return is an online form that charities in England and Wales are required to submit by law to the Charity Commission each year. The return requires you to answer specific questions regarding your charity as well as including copies of the trustee annual report and financial statements (audited or independently examined) for larger charities. The aim of submitting an annual return to the Charity Commission is to provide them with a clear picture of the charity’s financial position and activities throughout the year.

For smaller charities in particular this task can sometimes be time consuming. However, there are benefits to these requirements and you are given 10 months from the end of your financial year to file the annual return. The return must be completed online by logging into your Charity Commission account.

If you would like to find out more about preparing a charity annual return, please visit the government website here: https://www.gov.uk/guidance/prepare-a-charity-annual-return

How can we help?

At Hawsons we recognise that not-for-profit organisations have very different requirements from other businesses and are currently exposed to a challenging economic climate.

Our dedicated team fully understands the complex, ever-changing regulatory requirements of the charity and not-for-profit sector. Irrespective of your size we wish to support you to maximise the benefits you could achieve through our specialist professional advice.

Charities & not-for-profit organisations are currently facing extensive changes in their regulatory and legal framework. Given the additional pressures on fundraising, complex tax regimes, internal risk exposure, and stakeholder demands, it has never been more important to obtain specialist

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A revised version of the Charities Statement of Recommended Practice (SORP) is set to be updated from 1 January 2024. This is less than two years away.

The charities SORP was first introduced in 2015 and updated in 2019 to clarify and reflect amendments and changes to FRS 102.

The development process

The Charities SORP development process was created to discuss recommendations in the governance review which ended in 2019. The review recommended that greater focus was needed on small charities and wider engagement was required with stakeholder groups when the Charities SORP was developed.

These recommendations were acted on in February 2020 as six stakeholder groups were created called ‘strands’. Since the strands were created, they have been liaising with UK charity regulators. Subsequently the SORP-making body known as the SMB and the Charities SORP Committee was formed.  

The six strands that were created are:

·         Trustees

·         Smaller charities and independent examiners;

·         Professional and technical (qualified accountants specialising in charities, mainly audit)

·         Larger charities;

·         Major funders, donors, government and public bodies;

·         Academics, regulators and proxies for the public interest.

Once the six strands were formed the first order of business was to conduct an initial analysis of the amendments to the Charities SORP. During this analysis by the strands seventeen topics were raised for deeper analysis and they invited the Charities SORP Committee to create proposals to amend the Charities SORP.

The strands choose the following topics for in depth analysis:

·         A more tiered approach to concessions for charities of different sizes;

·         Charity reserves;

·         Accounting for donated goods and services;

·         Grant accounting;

·         Income recognition;

·         Impact reporting;

·         Sustainability reporting.

What now?

After in-depth analysis the Charities SORP committee will now begin work on drafting a consultation of the Charities SORP next edition throughout 2022. This consultation draft is planned to go to public consultation at the beginning of 2023.

The SMB’s published their aims and principles for drafting the next edition of the Charities SORP (FRS 102) in January 2022. There were four main aims:

‘Firstly the SORP is to address the needs of the main users who make use of a charity’s annual report and accounts who do not have the power to require specific information of a charity.’

‘Secondly in drafting the SORP we seek to comply with Financial Reporting Council’s (FRC) requirements that the: ‘SORPs should be developed in line with current FRC standards and best practice.’

‘Thirdly we aim to promote consistency across the charity sector by recommending a preferred treatment, approach or methodology.’

‘Lastly, we aim to keep our recommendations relevant to the socioeconomic context in which charities operate by retaining the advice of an expert SORP Committee.’

More details about these aims can be found in the SORP making body’s statement of drafting aims and principles.

These four aims are designed in a way where the Charities SORP should meet the needs of people that prepare and use trustees’ annual reports and financial statements.

This year the FRC is planning to publish an exposure draft of FRS 102 for public consultation following an initial call for input. Once the final changes to FRS 102 are confirmed, these will be implemented in the final edition of the Charities SORP (FRS 102).

In response to the FRC’s call for input, the Charities SMB provided some recommendations to the Charities SORP. These recommendations included a significant point ensuring that the same concessions available for commercial businesses are also available for charities.

How can we help?

At Hawsons we recognise that not-for-profit organisations have very different requirements from other businesses and are currently exposed to a challenging economic climate.

Our dedicated team fully understands the complex, ever-changing regulatory requirements of the charity and not-for-profit sector. Irrespective of your size we wish to support you to maximise the benefits you could achieve through our specialist professional advice.

Charities & not-for-profit organisations are currently facing extensive changes in their regulatory and legal framework. Given the additional pressures on fundraising, complex tax regimes, internal risk exposure, and stakeholder demands, it has never been more important to obtain specialist professional advice.