The aim of the Financial Reporting Council is “to promote transparency and integrity in business”. With regards to charities the aim is to help readers understand three things in particular:
- What are the objectives of the charity?
- What activities does it undertake to achieve those objectives?
- How are those activities funded?
Unfortunately, it only partially meets those objectives. The list of requirements for the Trustee’s Report ensures a comprehensive narrative that explains the first objective of what the charity is trying to achieve and allows for a good description of the activities.
The financial statements are overly complex and unhelpful. The Statement Financial Affairs is the most important report in the SORP and is equivalent to a Profit & Loss Account with a summary balance sheet added at the end. Even experienced readers of accounts find it difficult to judge whether the charity is succeeding or failing.
