The Financial Reporting Council (FRC) has issued three new financial reporting standards that form the new Generally Accepted Accounting Practice (GAAP) in the UK and the Republic of Ireland. New GAAP is mandatory for financial years beginning on or after 1 January 2015. GAAP establishes the basis upon which accruals accounts are prepared to give a ‘true and fair’ view.
The role of the Charities SORP is to provide guidance on how charities apply GAAP. When significant changes are made to GAAP, a new SORP must be issued to reflect those changes.
New GAAP is made up of 4 standards:
Of particular interest to charities is FRS 102 which sets out the bases on which income and expenditure and assets and liabilities are recognised, measured and disclosed in accounts. New GAAP is significantly different to the current GAAP with new disclosure requirements for the notes to the accounts.
To ease the transition for smaller entities, the FRC is retaining the current Financial Reporting Standard for Smaller Entities (the FRSSE).
Find out more about the new GAAP and the FRSSE from the FRC website.