The publication of the 2026 Charity Statement of Recommended Practice (Charity SORP) marks an important development for the charity sector in Ireland and the UK. While revisions to the SORP are periodically expected, the scale of the latest update is notable.

It brings together the 2024 FRS 102 Periodic Review, a 2025 consultation, and a renewed effort to make charity reporting clearer, more impactful and easier to navigate for users of charity financial statements.

The two headline changes in the 2026 SORP—to revenue recognition and leasing—were well anticipated and have been brought into the SORP directly as a result of the 2024 Periodic Review.

Notwithstanding this, these changes will bring with them substantial (and technically demanding) alterations to how charities traditionally have accounted for these items under previous SORPs.

Under revenue recognition, charities will need to clearly distinguish between exchange transactions (which, for a charity, might include income from contracts to provide residential care services) and non-exchange transactions (which might include donation income).

This is because exchange transactions will now be processed through the five-step revenue recognition model based on IFRS 15. For many income sources, this will be a straightforward exercise. For others, it may require a closer analysis of performance obligations and how income is allocated.

Non-exchange transactions will not be required to follow the five-step model and instead will have separately applicable rules.

Lease accounting has been brought into line with the changes to FRS 102. The distinction between operating and finance leases is removed for lessees, with most leases now recognised on the balance sheet as a right of use asset and corresponding liability.

Charities will need to ensure they have full visibility of their leasing arrangements, particularly where leases are informal, rolling or priced below market rates.

Although exemptions for low-value and short-term leases will reduce the impact for some organisations, the new requirements will still represent a change in how many charities record and present their assets and liabilities.

Another significant change in the 2026 SORP is the introduction of a three-tier reporting regime. This new framework recognises that charities vary widely in size and complexity, and it ensures that certain reporting obligations are only mandatory for the largest of charities.

Smaller organisations should benefit from more manageable and proportionate disclosures, while larger charities are expected to provide additional detail in certain areas.

The Trustee’s Annual Report will also undergo some change under the 2026 SORP. The revised guidance places greater emphasis on charities explaining what they do and the difference they make.

Prompt questions are now included in Module 1 and are designed to encourage a charity to explain the impact they are making in a way that is unique to them. Some mandatory sustainability-related disclosures are also included for larger charities which will require careful consideration.

The 2026 Charity SORP is effective for reporting periods beginning on or after 1 January 2026, leaving charities with limited time to prepare.

Those charities that apply the SORP should act now to familiarise themselves with the new requirements, assess the impact on their reporting processes and plan any updates needed for a smooth transition.

By acting early, charities can ensure they are ready to implement the revised SORP and meet their reporting obligations.

For a more detailed breakdown of the changes and what they might mean in practice, please see our recent article here.

Mike O’Halloran is Technical Manager, Professional Accounting, at Chartered Accountants Ireland