Whilst only an exposure draft at this stage a number of the proposals are in line with changes that are already happening to both international and UK financial reporting so these will happen.

Over recent history a new SORP has been published roughly every 10 years. With the last SORP taking effect in 2015, an update was long overdue, and the exposure draft had been expected for some time. The consultation on the exposure draft closed on 20 June and it is expected that the new SORP will be published in the autumn to take effect from 1 January 2026.

The good news is that this is for financial periods beginning on or after 1 January 2026 so the first full years affected will be entities with a 31 December 2026 year end. A school with a traditional 31 August year end will not have to implement the new SORP until 31 August 2027. However, schools will want to consider the impact in advance of implementation date as the changes could affect anything from reserves policies to banking covenants.

The draft standard proposes a three tier approach to the financial reporting requirements as follows:

• Tier 1 – Charities applying accruals accounts with gross incomes of up to £500,000
• Tier 2 – Charities with incomes of between £500,000 and £15m
• Tier 3 – Charities with incomes above £15m