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SORP Insight Series

Income recognition - frequently asked questions

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

Charities SORP (FRS102) recognises 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. What is the income recognition criteria under Charities SORP (FRS102)?
  2. Is grant income recognised differently from contract income?
  3. What is the accounting treatment for multi-year funding arrangements?
  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 Charities SORP (FRS102) 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 Charities SORP (FRS102) 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