SORP 2026: Preparing academy trusts for change
The introduction of Charities SORP 2026 marks one of the most significant reporting changes for academy trusts in recent years.
Although the changes will first apply to academy trust financial statements for the 2026–27 financial year, Annex B of the Academies Accounts Direction (AAD) 2025–26 has provided an early indication of what trusts can expect.
While there is no immediate impact on 2025–26 reporting, trusts should use this period to understand the changes and begin preparing now to avoid pressure later.
Why preparation should start now
SORP 2026 introduces changes that go beyond year-end disclosures. For many trusts, implementation may require updates to systems, processes, internal controls and financial reporting approaches.
Early preparation will help finance teams identify areas of impact, allocate resources and reduce disruption at transition.
Practical steps to consider include:
• Reviewing available FRC factsheets and SORP guidance
• Briefing senior leadership teams and trustees
• Building SORP 2026 considerations into year-end planning
• Engaging early with auditors and advisers
• Reviewing lease arrangements, contracts and income streams
• Assessing financial reporting impacts and updating policies where required
• Identifying any training needs across finance and governance teams
Lease accounting: bringing leases onto the balance sheet
One of the most significant changes under SORP 2026 will be the updated approach to lease accounting.
Under the new requirements, most significant leases held by academy trusts as lessees will be recognised directly on the balance sheet through:
• A right-of-use asset; and
• A corresponding lease liability
This represents a shift away from the traditional distinction between operating and finance leases.
On transition, comparative figures will not be restated. Instead, the cumulative impact of adopting the new rules will be reflected through opening reserves.
For trusts with multiple property, equipment or service arrangements, understanding the lease population early will be an important first step.
Revenue recognition: a new five-step model
SORP 2026 also introduces a revised approach to income recognition through a new five-step model for contracts with customers.
The updated framework places greater emphasis on identifying:
• The contract
• Performance obligations
• Transaction value
• Allocation of income
• Timing of recognition
Grant income is expected to remain largely unaffected in many cases, however academy trusts will still need to assess each income stream individually to confirm the correct accounting treatment.
Where reporting changes are required, trusts will need to determine their transition approach.
For revenue recognition, trusts will generally choose between:
• Restating comparative periods in full; or
• Recording the cumulative adjustment through opening reserves
Expanded Trustees’ Annual Report requirements
SORP 2026 introduces broader narrative reporting expectations, with greater focus on demonstrating impact and long-term resilience.
New and expanded disclosure areas include:
Greater focus on impact, volunteers and sustainability
Trusts will be expected to provide more meaningful commentary around the impact of activities, the contribution of volunteers and sustainability considerations.
Environmental and cyber risk reporting
Trustees will need to explicitly consider environmental and cyber risks within principal risk disclosures, including the controls and mitigation strategies in place.
More detailed reserves reporting
Additional explanation will be required around reserves policies and how reserve levels support financial sustainability.
Enhanced going concern disclosures
Trusts will need to provide more detailed explanations supporting their assessment that there are no material uncertainties affecting the organisation’s ability to continue as a going concern.
These changes may require closer collaboration between finance teams, trustees and operational leaders.
Updated thresholds and reporting tiers
SORP 2026 introduces revised thresholds and reporting tiers, with different reporting requirements depending on organisation size.
However, academy trusts have historically been restricted by the Academies Accounts Direction from applying small entity exemptions. As a result, the practical impact of these threshold changes may be more limited than in other areas of the charity sector.
Final reporting requirements for academy trusts will ultimately be confirmed through the AAD 2026–27.
How academy trusts can prepare
Although implementation is still ahead, trusts that begin planning now will be better positioned to manage the transition smoothly.
Key priorities should include understanding lease exposure, reviewing income streams, strengthening reporting processes and ensuring governance bodies are informed of upcoming changes.
SORP 2026 is more than an accounting update – it is an opportunity to strengthen reporting, improve transparency and build confidence in financial decision-making.
If you would like support understanding how SORP 2026 may affect your academy trust, our education and nonprofit specialists are here to help.