A survey of charity leaders has found that almost one in five charities are not prepared at all for new accounting rules coming into force shortly.

The Charity Finance Group (CFG) survey asked 101 leaders for their views on how prepared their organisation is for the Charities’ Statement of Recommended Practice: Accounting and Reporting by Charities, known as the SORP, which applies to financial years starting on or after 1 January 2027.

Among respondents 19% said they had not started preparing at all, while only one in 25 say they are fully prepared.

Three in ten say they are mostly prepared while the remaining respondents say they are partly set up for the new requirements but there is “significant work to do”. One in seven have yet to agree an implementation timetable.

The new SORP will require charities to report on certain types of income and lease arrangements as well as new expectations of increased transparency from large charities.

Also, the income thresholds for charities to have their accounts examined or audited has also changed. This includes a doubling the threshold for preparing accruals accounts from £250,000 to £500,000. While previously the threshold for having account checked by an independent examiner was £25,000 it has been increased to £40,000.

One in five surveyed by CFG have identified changes needed to their systems, data collection or record keeping. Just over one in five say they have fully assessed new lease accounting requirements, while a similar proportion have not assessed them.

For the new income recognition rules for exchange contracts, one in six have fully assessed them and more than one in four have not yet done this.

Despite concerns around preparation the survey also highlighted that nearly two thirds of charity leaders say they are “very or fairly confident that they understand the requirements”.

But more than a third “did not express confidence, including one in five who said they were not very or not at all confident”, found CFG.

More than four in five agree that charities are responsible for meeting the changes and half have discussed the new SORP with their auditor or independent examiner.

Areas they would like more support are around the new lease accounting arrangements, cited by more than one in five, and the Trustees Annual Report, mentioned by one in ten.

CFG mentions though that the survey was carried out before the Charity Commission had published a lease accounting helpsheet to support charities.

“It’s encouraging to see so many charities telling us they understand what the new SORP asks of them,” said CFG head of policy Richard Sagar.

“But understanding the changes and being ready for them are two different things. Updating systems and collecting the right data takes time, and with the new requirements already applying to accounting periods starting this year, charities that haven’t begun yet should make a start now.”

Updated guidance on the new accounting rules from the Charity Commission can be found here.

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