CCAB revises the LLPs SORP

  • Person icon Chris Turner
  • Calendar icon 11 June 2024 14:50

Last month, the Consultative Committee of Accountancy Bodies (CCAB) issued a revised Statement of Recommended Practice: Accounting by Limited Liability Partnerships (the LLPs SORP). In this blog, we take a look at what the main changes are, when they apply, and which LLPs they affect.




The underlying purpose of the LLPs 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 CCAB is the SORP making body responsible for the LLPs SORP and this latest version, the eighth edition, was approved by the FRC on 14 May 2024, subsequently being released on 20 May 2024.  

The changes are largely as expected in line with the draft published in August 2023, and for most LLPs are nothing to get excited about, simply including additional disclosures already required by the regulations or clarifying extant accounting requirements.  

Requirements of the Climate Related Financial Disclosure regulations 

The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 introduced a number of requirements with regard to disclosure of climate related matters for certain LLPs and groups. These regulations, which are already in force, sought to align disclosures with the Taskforce for Climate-related Disclosures (TCFD) recommendations.  

These additional disclosure requirements apply to LLPs which are: 

  • Traded LLPs or banking LLPs with more than 500 employees (or parents of groups with more than 500 employees), which must include the required disclosures within their strategic reports; or 
  • LLPs which have over £500m annual turnover and over 500 employees (or parents of groups with more than £500m annual turnover and over 500 employees) which must include the required disclosures within their energy and carbon report.  

Entities not falling within either of the above categories, may nevertheless wish to make some or all of the required climate-related disclosures.  

The additional disclosure requirements include: 

  • Various narrative requirements around climate-related risks and opportunities including the governance and risk management process as well as principal risks and opportunities;  
  • Actual and potential impacts of such risks and opportunities, and consideration of resilience of the business model and strategy; and 
  • Climate-related targets and KPIs.  

Sharing of group profits – interests in subsidiary LLPs 

New paragraphs have been added to the LLPs SORP to provide guidance on the appropriate treatment of members’ debt and equity interests in a subsidiary LLP for the purpose of determining whether a non-controlling interest in the net assets of the group is recognised.  

The guidance clarifies that in the group accounts of a parent LLP, members’ debt interests in a subsidiary LLP will not give rise to non-controlling interest - only members’ equity interests in the subsidiary LLP, not attributable directly or indirectly to the parent, are recognised as non-controlling interests.  

The guidance also considered members’ equity participation rights and a number of additional scenarios.  

Post-retirement obligations 

The extant flowchart on how to determine which guidance applies to a particular obligation has been updated (as have other related paragraphs). The flowchart now includes the (relatively uncommon) circumstances in which FRS 103 Insurance Contracts applies as well as when the requirements of Section 26 Share-based Payment of FRS 102 apply. 

One example of the latter, which has now been included in the LLP SORP directly, is that of a former member becoming entitled to a proportion of the disposal proceeds in the case of an exit event occurring.  

The new guidance should not result in changes to existing accounting, since they aim only to clarify existing practice.  

Automatic division of profits  

Guidance has been added to clarify that where a member does not provide any substantive services to an LLP, but nevertheless has an automatic right to a share of the LLP’s profits, this should be treated as a return on capital. A new example, Example 11, has been added to Appendix 2 to clarify the position.  

Effective date 

The revised SORP is effective for periods commencing on or after 1 July 2024, with early adoption permitted.  

It’s worth noting though that the above changes relating to climate-related financial disclosures have already been in effect through the regulations for periods commencing on or after 6 April 2022 and hence are already in force, with the LLP SORP simply catching up in this regard.  

What next? 

This new version of the LLPs SORP does not cover any of the recent amendments made to FRS 102 as a result of the periodic review. We can therefore expect another revision to the LLPs SORP to address these changes in due course. Whilst there is no set date for these changes to be published, we can reasonably a further revised SORP ahead of periods commencing on or after 1 January 2026, when the periodic review amendments become effective.  

How can Mercia help? 

Mercia offers the Mercia Limited Liability Partnerships Manual (LLPs Manual) which provides current and permanent file programmes to undertake audit or audit exempt assignments for LLPs. We’re also on hand to offer technical assistance by way of file reviews (whether hot or cold) and answering your technical queries. Our extensive range of training courses may also be of benefit.  

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