On 20 May 2024, the Consultative Committee of Accountancy Bodies (CCAB) published a new edition of the Statement of Recommended Practice – Accounting by Limited Liability Partnerships (LLPs SORP). The purpose of the SORP is to deal with issues that are specific to LLPs and ensure that, as far as possible, LLPs present financial statements that are comparable with those of other entities.

The SORP has been updated to reflect The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/46) that require certain LLPs and groups to make climate-related financial disclosures aligned with the Taskforce for Climate-related Disclosures (TCFD) recommendations. Additional guidance has been added to the SORP in relation to:

Other minor amendments have been made to the LLP SORP to enhance its clarity.

An additional paragraph has been added, paragraph 25D. This is to reference the requirements for certain LLPs to report climate-related financial information in either the strategic report or, if no Strategic Report is prepared, the Energy and Carbon Report that forms part of their Annual Report.

Additional paragraphs 119A to 119H have been added to provide guidance on determining whether a non-controlling interest is recognised in the net assets of the group where a parent holds debt and equity interests in a subsidiary that is an LLP.

Updates have been made to the flow chart in paragraph 76B of the SORP and the related text. This is guidance for preparers to consider whether a post-retirement obligation falls in the scope of FRS 103 before considering whether it falls in the scope of section 26, section 21, and sections 11 and 12 of FRS 102 respectively.

Additional paragraphs 87A to 87C have been added to provide additional guidance for scenarios where an LLP enters into an arrangement that meets the definition of a share-based payment and, accordingly, is accounted for by applying section 26 of FRS 102. The new paragraphs provide examples of situations section 26 applies to and sets out the accounting considerations for the share based payment transaction.

An additional paragraph 34D has been added to provide additional guidance in cases where a member of an LLP provides capital to the LLP and has an automatic right to a share of the LLP’s profits but does not provide any substantive services to the LLP. The automatic profit share right is treated as a return on capital. Example 11 in appendix 2 of the SORP has been added for the scenario described in paragraph 34D. It includes accounting considerations and illustrative journal entries.

The updated SORP is effective for periods commencing on or after 1 July 2024 (with early adoption permitted).

You can view the revised LLP SORP here.