Technical update

Charity accounting

The Charity SORP-making (Statement of Recommended Practice) body has published the latest version of the SORP effective for periods commencing on or after 1 January 2026.

The new SORP reflects the changes to FRS 102, which include:

• The income threshold for requiring a cashflow statement under the SORP is increased to £15m.
• Most operating leases will now need to be converted to finance leases.
• Charities must adopt a new five-step model for recognising income from exchange contracts, which may require changes to accounting policies and record-keeping.
• Larger charities must now provide a description of principal risks and uncertainties, along with their plans to manage them.
• Larger charities must explain their social investment policies and how investments contribute to their aims.
• The statement of financial activities will now require a multi-column analysis to show the income and expenditure for different fund types (endowment, restricted and unrestricted).
• The balance sheet will show the split of closing funds between restricted, unrestricted and endowment funds, and use ‘funds of the charity’ instead of ‘shareholders’ funds’.

While the Charity SORP is still optional in Ireland, some funders will require its use as a condition of continued funding; most larger charities apply it voluntarily.  When the new charity act is enacted, SORP is expected to become compulsory for certain larger charities.

The Charities Regulator has issued a warning to charities that they must use any income for their charitable purpose within five years of receiving it; if they fail to do so, that income could become taxable. The regulator has referenced Sections 207 and 208 of the Taxes Consolidation Act 1997. If a charity wants more time, it can ask Revenue for an extension but will need to show that it is in the process of using the money for its charitable purpose.

The Charities Regulator has also published guidance on the matters a charity should consider before giving staff or volunteers a gift card.

DETE reveals strategy

The Department of Enterprise, Tourism and Employment has issued a Statement of Strategy, which has  six aims:

• Drive competitiveness, sustainability and innovation, building the resilience of the economy.
• Drive prosperity and high standards of living through creating and maintaining high-quality jobs and increased productivity. This includes attracting talent for critical skills areas through simplification of the work permit application process.
• Strengthen tourism and support Irish-based enterprise to start, scale and compete internationally, including a review of costs for SME and micro enterprises, as well as simplifying and streamlining information and access to grants and supports.
• Provide the most competitive environment for the attraction and retention of inward investment at the cutting edge of innovation.
• Provide measured, certain and innovation-friendly regulation for business, workers and consumers. This includes removing unnecessary regulatory or administrative burdens on business and supporting the simplification and burden reduction agenda at European level. Also included is a review of the Irish Auditing and Accounting Supervisory Authority to ensure that the country has an effective auditing and accounting regime.
• Advocate for Ireland’s values, and strengthen our relationship and influence with the EU and international partners.

Reducing regulatory burden

Peter Burke, Minister for Enterprise, Tourism and Employment, has reported on a series of initiatives to cut red tape in business.  Some of these include:

• simplification of local enterprise office grant schemes
• a ‘once-only’ principle where information required to apply for multiple grants will only be asked for once
• 24-hour turnaround on grant approvals
• reduction in the scope of the corporate sustainable reporting directive
• a new SME test for government policies.

AML monitoring

ACCA has just published its annual anti-money laundering (AML) supervision report. ACCA supervises 630 firms in Ireland and 7,400 in the UK. The monitoring results are:

Of the three Irish practices (5% of the total monitored) that were non-compliant, all had failed to put procedures in place, or had only done so once they had been notified of the monitoring visit. A number of firms were also using an unsuitable third-party client risk-assessment tool that has since been withdrawn from the market. (The ACCA’s compliant risk assessment tool is free to download.)

ACCA is planning a major remote monitoring exercise in December, to be completed by 14 January, for both first-time monitoring of low-risk firms and second-time monitoring of high-risk firms. The key matters prior to a firm’s first monitoring visit are:

• a fully personalised, firm-wide risk assessment (example available on request from advisory services) – with evidence that it is updated every year
• a procedures manual tailored to the firm’s circumstances, with evidence that it is updated every year
• evidence of staff and partner AML training (one to two hours per year per staff member is sufficient) and an assessment of that training. The assessment from staff typically confirms that they understand the training; a certificate of attendance is not sufficient
• evidence of enhanced training for the money-laundering reporting officer, such as evidence of being trained in identifying red flags, and reading the CCAB-I guidelines and the Financial Action Task Force’s Guidance for a Risk-based Approach
• copies of any internal suspicious activity report and any report made on GoAML and ROS.

For a second monitoring visit, the firm will also need to show samples of their customer due diligence.

For the avoidance of doubt, AML applies to even the very smallest accounting firm and is a legal requirement applying from day one of a new practice. Access ACCA’s resources to assist practices in becoming AML compliant.