Leading Scottish accountants call for preparation.
The Institute of Chartered Accountants of Scotland (ICAS) is urging charities to prepare now for significant changes to their financial reporting obligations under the Charities SORP 2026.
Published last week, the revised SORP, effective for reporting periods beginning on or after 1 January 2026, introduces significant updates to how charities prepare their annual reports and accounts.
While the changes aim to enhance transparency and accountability, they also add substantial new reporting requirements - particularly around income recognition, lease accounting, impact reporting, and reserves.
The new rules on income recognition and lease accounting are especially complex.
ICAS recommends that charities begin their preparation for SORP 2026 now, focusing on a reviewing and strengthening processes for gathering the information trustees will need to prepare the annual report.
Charities should also ensure contracts and lease agreements are up to date and clearly documented, as well as identifying appropriate discount rates for calculating lease liabilities.
The group also said it is key to engage early with auditors, independent examiners, and providers of finance to assess the potential implications of the new requirements.
Christine Scott, head of charities and reporting at ICAS, said: “Charities need to be clear-sighted about the magnitude of the task ahead. The Charities SORP 2026 represents the most significant update in a decade, and while it supports greater accountability, it also increases the level of effort required to comply. Trustees and finance teams should begin preparing now to ensure they are ready for the 2026 reporting cycle.”
ICAS has long championed the introduction of impact reporting, having funded two academic research projects - in 2022 and 2024 - exploring how charities can effectively report the difference they make.
Christine Scott added: “The introduction of impact reporting across all tiers is a positive step, reflecting the growing expectation from funders and the public that charities demonstrate their outcomes and impact. Our research shows that meaningful impact reporting doesn’t need to be complex - it’s about telling your story clearly and evidencing the difference you make. Charities can achieve this by using simple qualitative measures or by developing quantitative measures.
“While the revised SORP brings challenges, it also provides an opportunity for charities to improve their reporting quality and enhance stakeholder confidence. With the right preparation, trustees can navigate these changes effectively and maintain the trust of their funders, donors and communities.”
