Draft Limited Liability Partnerships Statement of Recommended Practice published

The draft LLPs SORP has been updated in response to feedback that there is diversity in practice when interpreting whether divisions of profit are automatic or discretionary As a result of this, CCAB has proposed:

· Changes to the definitions included in the SORP relating to divisions of profit.

· Further consequential amendments throughout the SORP to ensure consistency of terminology.

· Additional guidance to help determine when an LLP has an unconditional right to avoid delivering cash or other assets to members.

· Changes to the ordering of the SORP to ensure that the guidance on the division of profits is presented together, reduce duplication, and improve the overall flow of the document.

CCAB has also identified some diversity in practice for how automatic and discretionary divisions of profit are presented in the cash flow statement. To address this diversity, CCAB has proposed:

· Additional guidance which sets out the basis for alternative classifications of cash flows relating to profit distributions.

· A requirement for LLPs to disclose their accounting policy for classifying share of profits in the cash flow statement and that cash flows be classified consistently from period to period.

CCAB has taken the opportunity to propose other minor clarifications to the SORP including updates to reflect the requirement for large LLPs and groups to produce an energy and carbon report as part of the annual report. They have also streamlined the SORP to improve the overall structure and flow of the guidance.

How can Mercia help?

We will track the development of the draft SORP and once the final version is published, we will look to include the revised guidance within our LLP Manual as soon as possible. Training material for LLPs will also track the draft and finalised versions of the SORP.

Find out more

The consultation draft can be accessed here.