Tag: financial reporting

SORP adoption in Ireland

SORP or SORP-ish?

Share on FacebookTweet about this on TwitterShare on LinkedIn

Most people in the nonprofit sector are by now aware of Charities SORP.  This is a standard for financial reporting specifically devised to make the financial transactions of charities more transparent especially in terms of how and where charities have raised their funds and how the funds have been used.

Adoption of charities SORP is promoted as best practice by sector leaders and it forms one piece of the “Triple Lock” standard.  This is seen by the Charities Institute of Ireland as fundamental to restoring trust in charities (the other two elements of the triple lock are the Governance Code and the Statement of Guiding Principles for Fundraising).

Benefacts is the only source of information about which charities use the SORP standard in Ireland, where its adoption is still voluntary.  The Charities Regulator will be coming out soon with a mandatory financial reporting standard for Irish charities, generally expected to follow the FRS 102 Charities SORP quite closely.

By reviewing what all charities actually report in their annual published financial statements, Benefacts is able to provide a detailed picture about the emergence of higher reporting standards, which has never been available before now.

Currently, 488 organisations in the Benefacts database of Irish nonprofits say that they follow the charities SORP reporting standard. But on closer inspection, 87 of these have chosen to adopt some of the features of SORP and only 401 can in fact be seen to be fully in compliance in terms of the accounting policies as specificied by the SORP-making body authorised by the Financial Reporting Council (FRC).  Benefacts has used this compliance standard as verified by the entity’s auditors as the benchmark for reporting Charities SORP compliance in the future.

Interestingly, a handful (17) of nonprofits that have adopted Charities SORP are not yet publicly registered as charities in Ireland.

In 2015, the total number of SORP reporters whose accounts are publicly accessible represented 9% of all registered charities. Here’s the list.  We’ll report on trends in SORP adoption again in our 2018 Sector Analysis Report.

Benefacts.ie is the only source of up to date analysis of all nonprofits (charities or otherwise) adopting the three standards (SORP, Governance Code and Statement of Guiding Principles for Fundraising). Use the facets on the left-hand side of the Benefacts search results screen to select which reporting standard you’re interested in – see image for example.

Benefacts nonprofit sector annual analysis 2017. (LtoR) Ian Brady, Head of Davy Charities and Not-for-Profit Group, Niamh Gallagher CEO Drinkaware and Diarmaid O'Corrbui, CEO Carmichael Centre

Ian Brady comments on how essential it is to measure the impact of this sector

Share on FacebookTweet about this on TwitterShare on LinkedIn

‘It’s a huge quantum of the sector that no one has been covering’

Ian Brady, Head of Davy Charities and Not-for-Profit Group, Davy Ireland, commented on how refreshing it was to have access to the most up to date information on the sector, and how he thinks this report will gain momentum in the years to come as a measurement of the impact of this sector on society. Listen to what he had to say here.

Benefacts Nonprofit Sector Analysis 2017. (LtoR) Adrienne Regan (Davy), Neil Pope (Millington Pope) and Faye Drouillard (The Giving Circle(s) of Amsterdam & Ireland) pictured at the launch of the inaugural annual Benefacts Nonprofit Sector Analysis 2017 in the Royal Irish Academy on Friday, 28th April. This benchmark report by Benefacts is the most comprehensive analysis ever undertaken of nonprofit organisations in Ireland, including registered charities. View the report at www.Benefacts.ie/analysis.

Faye Drouillard believes Benefacts Nonprofit Sector Analysis 2017 is a ‘public good’

Share on FacebookTweet about this on TwitterShare on LinkedIn

“This kind of data is a public good”

Faye Drouillard, Founder – The Giving Circle(s) of Amsterdam & Ireland, deemed the publication of the sector analysis report to be a positive step for the sector, and a very timely one.  She considers this information to be a public good; something that everyone has a right to know.

 

Read the Benefacts Nonprofit Sector Analysis 2017 here

Financial Reporting by Irish Nonprofits

Share on FacebookTweet about this on TwitterShare on LinkedIn

Why have some nonprofits chosen to adopt Charities SORP as a reporting standard when it isn’t yet mandatory in Ireland? And what is Charities SORP anyway?

Financial reports are a universally accepted way of assessing the health and well being of a company.  Financial reporting standards are mandated in law (the Companies Act, 2014), and provided by the Financial Reporting Council (FRC) for the UK and Ireland.

Financial reporting gives business owners an account of the use of their funds showing movements in the value of the assets, the cost of sales and any profit from activities.  Nonprofit companies also have to provide an account of the business but face unique challenges.  Rather than shareholders, they have stakeholders.  Nobody owns the assets – the nonprofit company sets out how these assets have been used to realise the best interests of the company’s beneficiaries or purposes.

Devised by a specialist Committee established by the FRC, the Statement of Recommended Practice (or SORP) for Charities provides a structured way for charities to provide an account of their business.  The Charities SORP provides information in a way that reflects the particular characteristics of charities.

Meeting the needs of stakeholders

As well as the usual measures of financial performance, the trustees of a charity need to provide a much greater level of analysis to stakeholders.  This covers:

  • How the charity deployed its resources in the course of the year to meet the needs of beneficiaries and other stakeholders (set out in the Trustees’ narrative report)
  • What were the charity’s sources of income and was any of it restricted to a particular purpose or purposes
  • How much of the charity’s funds were spent on charitable purposes, and how much on other costs (like governance overheads or fundraising costs)
  • The remuneration profile of higher-paid staff
  • How the charity is safeguarding its assets

Voluntary or  Mandatory?

Even though the SORP for charities is not yet mandatory in Ireland, it is already used by 325 Irish charities on a voluntary basis.  It is strongly recommended by lead agencies like Charities Institute Ireland, Carmichael Centre and The Wheel.

It’s widely expected that the Charities Regulator will soon mandate Charities SORP for charities in Ireland, meaning it will no longer be a voluntary standard.

For this reason, charities in Ireland should take a particular interest in the current round of consultation being led by the FRC Committee on Charities SORP, which includes three participants from Ireland.

The Committee are currently seeking views on suggestions to improve the Charities SORP – the closing date for submissions is December 11th.

For further details on financial reporting for this sector, or to learn more about individual organisations, explore our database here.