iSORP Project

iSORP Project

Accounting and reporting for Co-operatives: International Statement of Recommended Practice (iSORP)

A SORP is...

A SORP is a form of sector-specific guidance on accounting and reporting. They are to be found in a number of countries. It supplements existing accounting standards and provides recommendations on how to go about applying standards within the context of a particular sector, how to account for sector specific transactions and how to report on activities.

The co-operative iSORP idea

Co-operatives differ from investor-owned companies (IOCs) in terms of their ownership structure, purpose and identity, yet there is little recognition of this in accounting and reporting. The general assumption in accounting is that what works for IOCs, works for co-operatives. Co-operatives and the users of co-operative reports would benefit from co-operative-specific guidance aimed at:

  • Improving the relevance, comparability and understandability of information
  • Recognition of co-operative members as one of the main audiences of co-operative annual reporting
  • Improving the quality and of financial reporting by co-operatives
  • Explaining and recommending treatment of co-operative sector specific transactions
  • Explaining and recommending co-operative specific non-financial reporting content, including non-financial measures of co-operative performance
  • Clarifying, explaining and interpreting application of particular accounting standards to the co-operative context.

Also providing co-operatives with:

  • A means of improving the visibility of co-operatives in accounting and standards setting
  • A forum for debate and consultation within the co-operative sector
  • A focus for the development of a co-operative accounting framework, built on the experience, knowledge and skills of co-operators.

Why an international SORP?

While an international SORP cannot negate local variations in co-operative legislation and regulation it can offer recommendations on many of the topics where harmonization with international accounting is resulting in common approaches across the globe. International Financial Reporting Standards (IFRS) are becoming increasingly important and the recent production of the draft IFRS for Small and Medium Sized Enterprises (SMEs) provides a number of lessons for co-operatives in this regard. It indicates the increasing influence of international standards beyond listed companies; it points to the relevance, practicality and feasibility of international guidance, even where local variations exist; and it provides us with another example of the lack of visibility of co-operatives within standards setting. An international SORP (like the IFRS for SMEs) would provide non-mandatory guidance, designed for global application but requiring consideration, adaption and adoption at the local level.

Developing the iSORP

CEARC has embarked on a project to construct a draft international SORP and as part of that process is producing a series of working papers aimed at addressing key components of the SORP. Working and discussion papers will be available on this website for comment and feedback (see individual papers for deadlines) and following a review, revised final versions of each paper will be produced. This will build towards a full SORP which will also be made available for comment and feedback at the end of the process.

iSORP 1 - Objectives, scope and purpose

This is the first discussion paper in a series that will focus on specific content of a proposed co-operative iSORP.

Discussion paper 1 sets out draft objectives, scope and purpose for possible inclusion in the iSORP. These are offered as an initial draft for consideration and discussion. Following feedback and further discussion, a revised version will be included in the complete draft iSORP.

CEARC has also published a conceptual framework for co-operative accounting, which you will find on the conceptual framework page. The conceptual framework is wider in scope and provides a foundation and point of reference for the development of co-operative iSORP content.

Top

iSORP 2 - Reporting co-operative members' funds

This is the second discussion paper in a series that considers specific content for inclusion in a proposed co-operative iSORP.

Discussion paper 2 sets out draft guidance on reporting on members' funds in the financial statements. This paper is offered as an initial draft for discussion. Feedback and comment on this paper is encouraged.

CEARC has also published a conceptual framework for co-operative accounting, which you will find on the conceptual framework page. The conceptual framework is wider in scope and provides a foundation and point of reference for the development of co-operative iSORP content.

Although the initial deadline for comments on iSORP discussion paper 2 has now passed we continue to welcome comments and feedback on any and all aspects of the iSORP project.

Top

iSORP 3 - Reporting payments to members

This is the third discussion paper in a series that considers specific content for inclusion in a proposed co-operative iSORP.

Discussion paper 3 sets out draft guidance on reporting payments to members. Three types of payment are considered:

1. Daily business transactions with members

2. Patronage returns (sometimes described as dividends)

3. Return on member equity

This paper is offered as an initial draft for discussion. Feedback and comment on this and other CEARC papers is encouraged.

Top

iSORP 4 - Reporting on membership:

Joining, participating in and leaving the co-op

This is the fourth discussion paper in a series that considers specific content for inclusion in a proposed co-operative iSORP.

Top

iSORP 5 - Environmental sustainability reporting guidelines

This is the fifth in a series looking at developing content for an international Statement of Recommended Practice (iSORP) for co-operative accounting and reporting. This paper focuses on environmental sustainability reporting and considers:

  • Environmental indicators to include
  • Report layout
  • Connecting financial information with non-financial information - download pdf here

Top

iSORP 6 - Discussion Paper - Co-operative non-financial reporting

This is the sixth in a series looking at developing content for an international Statement of Recommended Practice (iSORP) for co-operative accounting and reporting. This paper focuses on co-operative non-financial reporting, including:

  • A focus on a small number of performance indicators
  • Suggestions for four 'common co-operative indicators'
  • Inclusion of up to five 'elective co-operative indicators' - download pdf here

Top