The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Caledonian Exchange, 19A Canning Street, Edinburgh EH3 8EG.
SCVO response: Exposure draft SORP (Statement of Recommended Practice)
The SORP (Statement of Recommended Practice) sets out the requirements for reporting in charity accounts. Between March and June 2025, the SORP-making body consulted on the Exposure Draft SORP. Responses were collected using an online form, on which SCVO submitted the following responses, based on feedback collected from 35 participants in a webinar held in June 2025.
Due to the length of the consultation, and the complexity of some of the issues, we worked with our pro bono accountancy partner wbg to identify the most significant changes for the sector, and concentrated on those in the webinar. We therefore did not gather information to respond to all of the questions in the consultation.
The key message received from charities who participated in the webinar was that many of the new requirements are complex, and therefore professional support will be required for many voluntary organisations to understand them. This will have financial and practical implications for voluntary organisations, which many participants felt anxious about.
Tiered structure: Do you support the move to three tiers?
Yes
Tiered structure: Do you consider that the proposed thresholds have been set at an appropriate monetary level in order to support a proportionate approach to reporting?
No opinion
Charities who attended a consultation event on this issue were split in their views on whether or not the thresholds are at an appropriate level. 33% thought yes, 39% thought no and 28% didn’t know.
Tiered structure: Do you agree that the Exposure Draft SORP clearly sets out the proposed reporting requirements for each tier?
Yes
By and large charities who attended our consultation event felt that reporting requirements were clearly set out. A suggestion was made that a step-by-step guide for trustees would be useful.
Tiered structure: Do you agree that charities within the largest income threshold should be referred to as 'tier 3' charities, or should they be referred to as 'tier 1' charities?
Agree with tier three
30% of charities in our event felt that the largest charities should be tier 1, while 70% agreed with the proposal to name them tier 3.
Do you have any additional comments in relation to the proposed tiered reporting structure in the Exposure Draft SORP?
While the tiered approach is welcome in seeking proportionality of reporting requirements, it should be noted that the charities that took part in our engagement event, particularly small charities, found the overall level of change being proposed to be overwhelming and potentially confusing. Charities will need to seek additional professional advice to navigate these changes, which will come with increased costs for already strapped organisations. It was also noted that existing difficulties for charities in accessing audit/independent examination support may increase as a result.
SOFA: Is the example table helpful?
Yes
Recognition of income: Does the module explain the relevant requirements of the five-step model in FRS 102 in a clear and understandable way?
No
Participants in our engagement webinar found it difficult to understand the five-step model during the event. While charities thought they would be able to grasp this given more time, and with professional advice, the requirements were not immediately clear to them. Many participants noted that worked examples would be very useful to aid understanding.
Legacies: Does the module set out the accounting requirements for legacy income clearly?
Yes
While not all participants in our webinar found this clear, the majority did. To assist those who found it more difficult to understand, it was suggested that worked examples would be useful.
Legacies: Accounting for legacies can be a complex area for charities to navigate. Is there a need for further guidance on this topic?
Yes
100% of participants in our webinar who responded to this question supported the need for further guidance
Lease accounting: Do you find the module easy to navigate as drafted?
No
Participants in our engagement webinar found it difficult to understand the requirements around lease accounting during the event. While charities thought they would be able to grasp this given more time, and professional advice, the requirements were not immediately clear to them. Many participants noted that worked examples would be very useful to aid understanding.
Statement of cash flows: Do you agree with the proposal in the Exposure Draft SORP that only tier 1 and tier 2 charities, that do not meet the small entity threshold, and all tier 3 charities are required to prepare a statement of cash flows?
Yes
63% of respondents to this question at our webinar agreed with the proposal, and none answered no (37% were unsure).
Do you have any other comments on the Exposure Draft SORP?
The key message received from charities who participated in the webinar was that many of the new requirements are complex, and therefore professional support will be required for many voluntary organisations to understand them. This will have financial and practical implications for voluntary organisations, which many participants felt anxious about.
