In February 2019, we responded to a review of how the Charities Statement of Recommended Practice (SORP) for accounting and reporting is developed and governed.
The Charities SORP Committee Governance Review Panel published its final report on the future development of charity reporting and accounting in June 2019. You can find the published Charities SORP Committee Governance Review on the Charity Commission for England and Wales website.
The Fundraising Regulator’s commitment to working with the Charity Commission for England and Wales (CCEW) and the Charity Commission for Northern Ireland (CCNI) is set out in our joint Memorandums of Understanding. This includes sharing information on charities regarding fundraising issues and to assist the discharge of each organisations’ public functions.
We welcome the consultation on the Statement of Recommended Practice (SORP) governance. Our interest in SORP is three-fold:
- Calculating how our regulation is funded: we are funded primarily by a voluntary annual levy on charities with fundraising expenditure over £100,000. To calculate this, we use data on fundraising expenditure from the most recent accounts submitted to CCEW or CCNI as the most direct measure of fundraising activity which comes within our regulatory scope. It is therefore important that SORP accounting reporting is as clear as it can be so we can operate the voluntary levy arrangements on charities fairly and efficiently.
- Casework investigations: we may use charity reports and accounts information when conducting investigations into charities where a serious complaint is received about their fundraising.
- Compliance with the Charities (Protection and Social Investment) Act 2016 provisions on fundraising: in terms of our role, we have a regulatory interest in how SORP guidance reflects the reporting charities make on their fundraising activity in compliance with the requirements in the Charities Act 2016.
The SORP Committee structure and communication of its work
We support the current structure in which the SORP making body of national charity regulators is advised by a committee comprised of a range of stakeholders who know the sector best and can speak from experience of implementing SORP in practice.
However, as a regulator we do not currently have representation on either committee. Given the importance of the SORP in fulfilling our regulatory responsibilities and to ensure these are adequately reflected in the SORP making considerations of the committee, we ask that the committee consider including the Fundraising Regulator in its membership for both:
- the membership of the SORP making body; and
- the SORP advisory committee.
Other comments on how the work of SORP Committee is communicated
In our view, communication of the SORP Committee’s work sets the right balance between technical and lay understanding in the amount of guidance it provides, taking into account the wide variance in expertise across charities and where many charity treasurers are acting in a voluntary capacity. However, recommendations can change over time and understanding is not always consistent in charities regarding the rationale for why some recommendations are included. Value could potentially be added by providing greater context as part of the SORP document for why SORP recommendations are made or changed over time.
Some charities we have spoken to suggest that the criteria is not as clear as it could be for who is included on the advisory committee and how non-advisory committee members can inform work on SORP outside of formal consultation.
SORP is sometimes incorrectly seen as being of relevance only to financial experts when multiple work areas may have responsibility for reporting financial data. Some broader engagement events or materials for others working in a charity to show how the SORP is relevant to them and how they can work effectively with auditors may be beneficial.