2 Mins
And so the highly anticipated Consultation Draft of the Charities SORP for periods commencing on or after 1 January 2026 is finally here: Invitation To Comment – SORP.
What did we know before now?
That the two main accounting changes would be in respect of accounting for leases, and the introduction of a new 5-step model for assessing income recognition from contracts with customers.
We also knew that as part of the drafting process, the SORP-making body had undertaken a review of the whole SORP to identify ways to benefit users. This has included key considerations like proportionality of the SORP and the content of the Trustees’ Annual Report.
What have we learned from the Exposure Draft SORP 2026
Module 5 of the SORP on income recognition has been significantly re-written, with separation into two parts dealing with exchange transactions and non-exchange transactions respectively. The over-arching three criteria of “entitlement, probably, and measurement” from the Extant SORP are now only used where applicable to certain types of income.
Two new modules of the SORP – 10A and 10B – cover ‘Provisions, contingent liabilities and contingent assets’ and ‘Lease accounting’ respectively. The latter is 25 pages and therefore represents the significant change we were anticipating.
Module 1 covering the Trustees Annual Report reflects the 3-tier classification that has been introduced, with Tier 1 charities having income < £500,000; Tier 2 < £15million; and Tier 3 having income > £15million.
What does the consultation ask the sector about?
The consultation period opened on 28 March and runs for 12-weeks with a closing date of 20 June 2025. While this is a busy period for many charities, responding to the consultation is an important exercise.
It is a detailed consultation, with 40 questions that the SORP-making body gives you the opportunity to provide your views on. Naturally the majority of those cover the main changes introduced in Modules 1, 5 and 10B but also covering other consequential changes and improvements that the SORP-making body have intended to make.
As we have more time to consider and analyse the changes, we will provide further updates in due course. In the meantime, please look out for advertised events from relevant sector organisations covering the proposed changes and the Consultation questions.