Struggling with SORP compliance? Easily Access the Data you Need with Invoice Automation

We all agree that accounting and managing finances can be a headache. It’s the beating heart of any business but can lead to time and effort being wasted at no fault of the team involved. This is especially true for charities. Charities are subject to stricter financial reporting regulations than most to ensure full accountability and visibility when dealing with income and expenditure. While performing such important work, the last thing on your mind should be accounting compliance. However, charities are required to adhere to Financial Reporting Standard (FRS102), and a Statement of Recommended Practice (SORP) was released to aid charities in this. Though a good thing, SORP FRS102 further complicates SORP compliance as it enforces tight requirements, which can be difficult for a busy organisation. But what exactly are FRS102 and SORP?

Firstly, FRS102 is a SORP compliance standard which was created and implemented across Ireland and the UK in 2015 so it has been in effect for some time, but a refresher is always a good thing. It was brought about to consolidate financial reporting criterion and guidelines into a single standard so financial reporting information could be easily found. This applies to SMEs who are not required to adhere to IFRS, RFS101, or RFS105. It is reviewed and amended every 5 years, the latest edition being published in January 2022. When it is updated, businesses to which it applies should review the new version to ensure there isn’t an accidental breach. SORP are a set of guidelines which interpret FRS and generally accepted accounting practices (GAAP) so you can confirm your financial accounts and reporting conforms to the right standards. It is overseen by 17 members each from a charity law jurisdiction covered by GAAP and updated when/after the FRS102 is. Though not a requirement, it is a useful tool that should be utilised by companies. But it brings about challenges for charities, including:

1. Directors’/Trustees’ reports, which are a type of business report which includes in-depth detail regarding the charity’s activities and financial situation. For example, one must describe how it benefits the public, the risks facing them and how these are mediated, funds held as custodian trustee, and any renumeration paid even if zero.
2. Rather than an income statement, a Statement of Financial Activities (SOFA) is required. This is more detailed. It puts the income and expenditure for every activity on display. It does so by providing an analysis of income from key streams, trading and charitable activities, donations, and legacies. In addition to this, it shows the money spent on investing, trading, and activities performed by the charity.
3. A cash flow split into three headings (operating, investing, financing) being required for organisations with an annual revenue of over €500,000, a change in the way errors are corrected, and the treatment of investment property and financial instruments.

Dealing with donations, organising fund-raisers, helping your charity help others is hard enough without the added pressure of having to comply with a variety of finance reporting standards and regulations. Having to keep an accurate, up-to-date account of all income and expenditures is a laborious task. Invoices can be easily misplaced, data inputted incorrectly, or duplicates waste your accounting staffs’ time and energy, among many other potential pitfalls. How can you guarantee your charity is adhering to all the financial regulations under SORP RFS102 and how to do it efficiently so that you can better focus on benefitting your cause?

Utilising a more stream-lined and accurate accounting process for SORP FRS102 is essential. Though there are a vast range of options, one which is proving beneficial for charities time and time again is an Accounts Payable Invoice Automation (APIA) solution. Many charities have already made the switch and are benefitting from it. For example, Mencap, CareChoice Group Ireland, and Pancreatic Cancer UK who reported “an immediate and significant impact,” use Kefron AP. They have found the change has reduced stress, data management errors, and time spent processing supplier invoices.

There are many ways in which an AP automation system can be of service to your charity. It’s an incredibly intuitive system that requires minimal to no intervention from you. Once you receive an invoice via email, it will automatically be uploaded to the Kefron AP system, meaning nothing is changed for your suppliers. Or, to cut down the number of emails in your inbox, supplier can upload them directly. If any duplicates are sent, they are automatically deleted so your team doesn’t have to trawl through them.

Importantly, you can easily segregate expenditure under your key SORP compliant headings of investing, trading, and activities performed by the charity and this can be automated using your accounting codes.

The solution can be made accessible to an unlimited amount of people, including staff working remotely so everyone can collaborate easily for all aspects of the invoice processing and approvals. Not only this, but your suppliers can also gain access, giving them peace of mind as they can track any documents’ process.

All necessary data is extracted swiftly by the Kefron AP system, removing the need for manual extraction of data. This, in turn, reduces error, as human intervention is removed, along with saving your team a significant amount of time. Moreover, you can be assured that you are receiving the best possible extraction accuracy as the Kefron provides you with an optimised extraction service to do the heavy lifting. This means your team members don’t need to become data extraction experts.

Kefron AP offers you the stress-free capability, time, and automation needed to process invoices easily and ensures you remain SORP compliant.  So, what are you waiting for? To begin your AP automation journey, click here.