Understanding the Key Changes in Charities SORP 2026 Modules and Their Implications

The Charities SORP 2026 introduces important updates that affect how charities prepare and present their annual reports and accounts. These changes come in the form of revised modules, each focusing on specific areas of charity accounting and reporting.

Understanding these updates is essential for trustees, accountants, and charity managers to ensure compliance and improve transparency. This post breaks down the key changes in the main modules of the Charities SORP 2026 and explores what they mean for charities of different sizes and types.

Scope and Application Module

The first module sets the foundation by defining the scope and application of the SORP. The 2026 update introduces a tiered reporting structure based on a charity’s income level. This structure divides charities into three tiers, each with different reporting requirements. This change aims to make reporting more proportionate and manageable for smaller charities while maintaining transparency for larger ones.

The module now includes clear guidance on:

• The criteria for each tier

  
  

• How charities should report under the new tiering system

  
  

• The relationship between SORP tiers and Companies Act thresholds

  
  

Other adjustments align the module with FRS 102 accounting standards and reflect feedback from stakeholders. This means charities will have a clearer understanding of where they fit in the reporting framework and what is expected of them.

Trustees’ Annual Report Module

This module has undergone significant changes to enhance the quality and depth of disclosures. The Trustees’ Annual Report now requires charities to report on how they address environmental, governance, and social issues. This reflects a growing emphasis on accountability beyond financial performance.

Key new requirements include:

• Mandatory impact reporting for all charities, ensuring they explain the difference their work makes

  
  

• More detailed narrative for tier 2 and tier 3 charities on how legacies are recognised in the accounts

  
  

• A restructured format to improve clarity and flow of information

  
  

These changes encourage charities to communicate their mission and outcomes more effectively, helping stakeholders understand the charity’s broader impact.

Fund Accounting Module

Changes in this module respond to recent legislative updates and stakeholder input. The adjustments clarify how charities should manage and report different types of funds, such as restricted and unrestricted funds. This helps ensure that charities maintain proper control over resources and report them accurately.

The updated guidance supports better fund management practices, which is crucial for maintaining donor trust and meeting legal obligations.

Accounting Standards, Policies, Concepts, and Principles Module

This module also sees significant updates, particularly around the going concern basis of preparation. Charities must now provide more detailed guidance on how they assess their ability to continue operating in the foreseeable future.

Other changes include:

• Alignment with FRS 102 standards

  
  

• Enhanced guidance on accounting estimates and error corrections

  
  

These updates help charities present a more accurate and reliable financial picture, which is essential for decision-making and external scrutiny.

Trustee reviewing charity financial reports

Statement of Financial Activities Module

This module experiences limited changes focused on improving presentation based on stakeholder feedback. The adjustments mainly involve formatting and table layouts to make financial information easier to understand.

While the changes are not extensive, they contribute to clearer communication of a charity’s financial activities, supporting transparency and accountability.

What These Changes Mean for Charities

The Charities SORP 2026 modules reflect a shift towards more tailored reporting, greater transparency, and stronger alignment with accounting standards. Charities will need to:

• Review their tier classification to understand their reporting obligations

  
  

• Enhance their Trustees’ Annual Reports to include impact and governance disclosures

  
  

• Update fund accounting practices to comply with new legislative guidance

  
  

• Provide clearer explanations of accounting policies, especially regarding going concern

  
  

• Present financial statements in a more accessible format

  
  

For example, a medium-sized charity classified as tier 2 will now include detailed impact reporting and legacy recognition narratives, which were previously optional or less emphasized. Smaller charities in tier 3 will benefit from simplified reporting requirements but still need to meet essential transparency standards.

Final Thoughts

The Charities SORP 2026 introduces important changes that will improve how charities communicate their financial health and social impact. By understanding the revised modules, charities can better prepare their annual reports, meet stakeholder expectations, and build trust. Trustees and finance teams should start reviewing these changes now to ensure smooth adoption and compliance.