The Consultative Committee of Accountancy Bodies (CCAB), which brings together five professional accountancy organisations in the UK and Ireland including ICAEW, is responsible for issuing the Statement of Recommended Practice (SORP). Its underlying purpose is to deal with issues specific to Limited Liability Partnerships (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 include changes to the definitions included in the SORP relating to divisions of profit with further consequential amendments throughout the SORP to ensure consistency of terminology.

It also provides additional guidance to help determine when an LLP has an unconditional right to avoid delivering cash or other assets to members.

The changes made in the revised LLPs SORP are not intended to change the underlying accounting requirements for the treatment of LLP profits. Rather, the amendments provide guidance on the application of the underlying requirements, for example, by setting out the relevant accounting considerations when determining whether a division of profits is discretionary or automatic.

Changes have also been made 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.

Additional guidance which sets out the basis for alternative classifications of cash flows relating to profit distributions has been added, along with a requirement for LLPs to disclose their accounting policy for classifying distributions of profits in the cashflow statement and that cash flows be classified consistently from period to period.

The updated SORP is effective for periods commencing on or after 1 January 2022 with early adoption permitted and can be found here: Statement of Recommended Practice Accounting by Limited Liability Partnerships.