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Insight series - SORP 2015

Income recognition - frequently asked questions

jigsaw missing piece
Crowe UK runs a help line for the Charity Finance Group (CFG). This guidance considers some of the frequently asked questions from charities relating to income recognition

Contrary to popular misconception SORP 2015 allows much flexibility and it is unlikely that charities will have to make material changes to their income recognition. In fact SORP 2015 has clarified and explicitly recognised that it is possible to think beyond the obvious with income recognition in a way that makes sense for a charity’s circumstances. There is no need for a stereotype prescriptive approach and it is important to ensure that the accounting fits the reality of the many different funding and donative arrangements that exist in the charity sector.

  1. Will the modification of the income recognition criteria mean that charities will have to recognise more income and restate their income for prior periods when they adopt FRS102 and the new SORP?

  2. Is grant income to be recognised differently from contract income?

  3. Does this mean that we can recognise income in line with related expenditure?

  4. What about time restrictions?

  5. Can income be recognised in line with a funder’s stage payments?

  6. FRS 102 allows deferring the recognition grants provided to purchase fixed assets does SORP 2015 permit this?

  7. At present we recognise grant and donation income when we know that we will be receiving it, does all the discussion above mean that we will need to change this and defer some of the income?

  8. Has SORP 2015 changed when a legacy should be recognised?

  9. What about gifts in kind?

  10. What about the time value of money.

Download the PDF guidance to read our responses to all 10 questions.


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Naziar Hashemi
Naziar Hashemi
Head of Social Purpose and Non Profits