Bite Sized Guide:
SORP Module 1 – Trustees
Annual Report
Welcome to the Tait Walker bite sized guide on the new Charity SORP, which follows the charity
seminar in which an overview of the upcoming changes were given.
USER GUIDE
The purpose of these bite sized guides is to help charities to understand the new SORP coming into
effect from 1/1/15 applying to year ends after 31/12/15. For most charities this means that it
impacts the 31/3/16 for the first time.
This guide has been split so that it covers both the SORP applicable to charities applying the FRSSE
SORP and to those applying the FRS102 SORP. Our previous bite sized guide, ‘SORP Introduction –
Which SORP do I use?’, discussed which of the SORPs applies. Please refer to that guide if you are
unsure which SORP you are applying.
Once you have determined which SORP your charity will be applying (FRSSE or FRS102) please note
that the distinction referred to below between 'small' and 'larger' charities is determined whether
your charity is required to have a statutory audit or not.
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Small charities are those below the statutory audit limit of either £500k Income or, where
Gross Assets exceed £3.26m, then an Income must be below £250k.
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Large charities are those subject to statutory audit, due to their Income exceeding £500k or
because where Gross Assets exceed £3.26m their Income exceeds £250k.
The new SORP also refers to 'Must', 'Should' and 'May' which determines whether something is
mandatory, best practice or guidance.
INTRODUCTION
The Trustees Annual Report (TAR) is identical whether you are preparing the accounts using either
the FRSSE SORP or the FRS102 SORP. The guidance below sets out the requirements for both small
and large charities.
The TAR continues the requirement that the charity must tell its story in a balanced manner,
bringing the numbers of the financial statements to life. The report and accounts taken together
should provide a picture of what the charity has done (its outputs) or achieved (its outcomes), or
what difference it has made (its impact).
CONTENT OF THE TRUSTEE ANNUAL REPORT
The SORP’s requirements that all charities must follow are set out in the following headings:
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Objectives and Activities;
Achievements and Performance;
Financial Review;
[Plans for Future Periods – Large only]
Structure, Governance and Management;
Reference and Administrative Details;
Exemptions from Disclosure; and
Funds Held as Custodian Trustee on Behalf of Others.
There is no fixed order to follow and the headings can be re-arranged to suit the story the charity is
delivering in its TAR.
ALL CHARITIES
OBJECTIVES AND ACTIVITIES
All charities MUST provide a summary of:
 the purposes of the charity as set out in its
governing document; and
 the main activities undertaken.
 Explain the main activities undertaken to
further the charity’s purposes for the public
benefit; and
 include a positive statement confirming
whether the trustees have had regard to the
Charity Commission’s guidance on public
benefit.
The report SHOULD explain the activities, projects
or services identified in the accompanying
accounts, including numerical information which is
consistent with the accounts.
LARGER CHARITIES only
Larger charities MUST also provide an explanation
of;
 its aims, including details of the issues it seeks
to tackle and the changes or differences it
seeks to make through its activities;
 how the achievement of its aims will further
its legal purposes;
 its strategies for achieving its stated aims and
objectives;
 the criteria or measures it uses to assess
success in the reporting period; and
 the significant activities undertaken (including
its main programmes, projects or services
provided), explaining how they contribute to
the achievement of its stated aims and
objectives.
 Social investment - must provide an
explanation of its social investment policies
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ACHIEVEMENTS AND PERFORMANCE
The report MUST contain a summary of the main
achievements of the charity.
FINANCIAL REVIEW
The report MUST contain a review of the charity’s
financial position at the end of the reporting
period.
The charity MUST explain any policy it has for
holding reserves and state the amounts of those
reserves and why they are held.
If the trustees have decided that holding reserves is
unnecessary, the report must disclose this fact and
provide the reasons behind this decision.
If, at the date of approving the report and
accounts, there are uncertainties about the
charity’s ability to continue as a going concern, the
nature of these uncertainties SHOULD be
explained.
The report MUST also identify any fund or
subsidiary undertaking that is materially in deficit,
explaining the circumstances giving rise to the
and explain how any programme related
investments contributed to the achievement of
its aims and objectives.
Grant-making - must explain the charity’s
grant-making policy and explain how its grantmaking activities contribute to the
achievement of its aims and objectives.
Larger charities MUST review:
 the significant charitable activities
undertaken;
 the achievements against objectives set;
 the performance of material fundraising
activities against the fundraising objectives
set;
 investment performance against the
investment objectives set where material
financial investments are held; and
 if material expenditure was incurred to raise
income in the future, the report must
explain the effect this expenditure has had,
and is intended to have, on the net
return from fundraising activities for both the
reporting period and future periods.
Larger charities MUST also comment on the
significant events that have affected the financial
performance and financial position of the charity
during the reporting period. In
particular the report MUST explain:
 the financial effect of significant events;
 where the charity holds material financial
investments, the investment policy and
objectives set;
 a description of the principal risks and
uncertainties facing the charity and its
subsidiary undertakings, as identified by the
charity trustees, together with a summary of
their plans and strategies for managing those
risks; and
 any factors that are likely to affect the
financial performance or position going
forward.
deficit and the steps being taken to eliminate the
deficit.
PLANS FOR FUTURE PERIODS
This section is not mandatory for Smaller charities.
STRUCTURE, GOVERNANCE AND MANAGEMENT
The report must provide details of:
 the nature of the governing document (e.g.
trust deed, memorandum and articles of
association etc.);
 how the charity is (or its trustees are)
constituted (e.g. limited company,
unincorporated association, charitable
incorporated organisation etc.); and
 the methods used to recruit and appoint new
charity trustees, including details of any
constitutional provisions for appointment, for
example election to post. Where any other
person or external body is entitled to appoint
one or more of the charity trustees, the report
should explain this and give the name of that
person or body.
Charities may withhold certain governance and
management details where the criteria
for exemption from disclosure are satisfied (see
‘Exemptions from disclosure’).
REFERENCE AND ADMINISTRATION DETAILS
The report MUST provide the following reference
and administrative information about the charity
and its trustees:
 the registered name of the charity;
 any other name which the charity uses;
 the charity registration number(s) for the
jurisdiction(s) in which it is registered as a
charity (and its company registration
number);
Larger charities MUST provide a summary of the
charity’s future plans and provide details of any
activities planned to achieve them.
Larger charities MUST provide the user with an
understanding of how the charity is
constituted, its governance and management
structures, and how its trustees are
trained. In particular, the report must explain:
 the charity’s organisational structure (and
those of its subsidiary undertakings);
 how the charity makes decisions, for example
which types of decisions are taken by the
charity’s trustees and which are delegated to
staff;
 the policies and procedures for the induction
and training of trustees;
 the arrangements for setting the pay and
remuneration of the charity’s key
management personnel and any benchmarks,
parameters or criteria used in setting their pay;
 if the charity is part of a wider network (for
example if it is affiliated with an umbrella
group), how, if at all, this impacts on the
operating policies adopted by the charity; and
 relationships between the charity and related
parties, including its subsidiary undertakings,
and with any other charities and organisations
with which it cooperates in the pursuit of its
charitable objectives.
Larger charities MUST state to whom the trustees’
delegate day-to-day management
of the charity and from whom trustees are taking
advice.
In particular, the report MUST provide:
 the name of the chief executive officer or
other senior management personnel to whom
the charity trustees delegate day-to-day
management of the charity; and
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the address of the principal office (and where
it is a charitable company, the address of its
registered office);
the names of all charity’s trustees on the date
the report was approved or who served as a
trustee in the reporting period;
where a charity has any corporate trustees,
the names of the directors of the body
corporate on the date the report was
approved; and
the names of any trustee for the charity
holding the title to property belonging to the
charity (for example custodian trustee or
nominee) on the date the report was
approved; or
who served as a trustee for the charity in
holding the title to property belonging to
the charity in the reporting period.
Charities may withhold certain reference and
administrative details where the criteria for
exemption from disclosure are satisfied (see
‘Exemptions from disclosure’).
EXEMPTIONS FROM DISCLOSURE
Where it is necessary to omit certain details (e.g.
names of any senior staff members, or the charity’s
principal address) because of placing that person
into personal danger, then disclosure of the reason
should be given.
FUNDS HELD AS CUSTODIAN TRUSTEE ON BEHALF
OF OTHERS
If the charity is, or it trustees are, acting as
custodian trustees, the charity must refer to the
SORP module ‘Accounting for funds received as
agent or as custodian trustee’.
 the names and addresses of any other
relevant professional service or advice to the
charity, including its solicitors, auditor, bankers
and investment advisers.
For further information, please contact our Head of Not-for-Profit, Simon Brown on 0191
285 0321 or email simon.brown@taitwalker.co.uk
Office locations and contact details:
1.
Newcastle upon Tyne:
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne. NE3 3LS
Tel (+44) 0191 285 0321
Fax (+44) 0191 284 9117 DX 60368
2.
Northumberland:
10 Manchester Street
Morpeth
Northumberland. NE61 1BH
Tel (+44) 01670 513106
Fax (+44) 01670 504064 DX 62514
3.
Tees Valley:
Medway House
Fudan Way
Teesdale Park
Stockton on Tees. TS17 6EN
Tel (+44) 01642 676888
Fax (+44) 01642 605866
www.taitwalker.co.uk
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