2025 IA SORP for authorised funds: Key changes, reporting requirements and actions for ACDs and AFMs

The 2025 IA SORP is the first full revision of the SORP for authorised funds since 2014. With the first in-scope annual reporting periods now approaching, Authorised Corporate Directors (ACDs) and Authorised Fund Managers (AFMs) should ensure they understand the new valuation, disclosure and presentation requirements. This guide explains the key changes, common implementation challenges and the practical actions ACDs and AFMs should take now to support a smooth year-end reporting and audit process.

The Investment Association issued the 2025 SORP in October 2025, replacing the 2014 edition. It applies to accounting periods beginning on or after 1 January 2026, meaning 31 December 2026 year-ends will be the first annual reports in scope. Interim reports falling within an in-scope accounting period are also subject to the 2025 SORP. This includes, for example, a half-yearly report to 30 June 2026 for a fund with a 31 December year-end.

The FCA has updated COLL to refer to the 2025 SORP through the Collective Investment Schemes Sourcebook (Statement of Recommended Practice) Instrument 2026, which came into force on 26 June 2026.

Many of the changes relate to presentation and disclosure. The revised valuation convention can, however, affect reported investment values, while the going concern, distribution policy and fair value requirements may require additional analysis and supporting documentation. This guide summarises the changes and what ACDs/AFMs should be doing now.

What is changing under the 2025 IA SORP?

The table below summarises the principal changes, each of which is explained in more detail in the sections that follow.

Valuation basis	Mid-market price replaces bid as the usual fair value convention, applied prospectively.
Balance sheet	A simplified FRS 102-based format, with more detail moved to the notes.
Investments and fair value	Investments analysed by class of instrument and fair value hierarchy level in a single note.
Going concern	An explicit statement of the basis of preparation, with the related FRS 102 disclosures.
Distribution policies	Requirements substantively carried forward, with clarified wording on class-specific policies and net revenue/(expense).
Risk disclosures	Refocused on FRS 102; sensitivity analysis is still required, with exposure analyses where specific conditions are met.
Removed requirements	Distribution tables, the reconciliation of units in issue and the analysis of transaction costs by asset class.

1. Mid-market pricing requirements

Paragraph 2.12 now identifies the mid-market price as normally the most representative measure of fair value within the bid-ask spread, reflecting the amendments to Section 2A of FRS 102. Holdings in other collective investment schemes are valued at the mid of their buying and selling prices, or at the single price where the scheme is single-priced.

The change in valuation technique is applied prospectively under paragraph 1.41 of FRS 102 (SORP para 1.12). Comparatives are not restated, so the effect of the revised convention is recognised in net capital gains/(losses) in the first period of application. The financial statements should explain the revised valuation convention and its effect, with the comparatives presented on the previous basis.

The financial statement valuation basis and the prospectus-based dealing valuation should be considered separately. ACDs/AFMs should not assume that the dealing valuation must automatically change; any difference between the dealing NAV and the financial statement NAV should be understood and reconciled.

2. Changes to balance sheet presentation

The balance sheet now follows Section 4 of FRS 102, adapted for authorised funds (paras 3.47 to 3.53). The fixed and current asset sub-headings and the “creditors” heading are no longer used. The principal changes to the balance sheet captions are illustrated below. Paragraph 3.48 sets out the minimum line items to be presented:

2014 SORP	2025 SORP
Fixed assets: Investments	Investments
Current assets: Debtors	Amounts receivable
Cash and bank balances	Cash and cash equivalents
Investment liabilities	Investment liabilities
–	Provisions (where applicable)
Creditors: Bank overdrafts	Bank overdrafts
Distribution payable	Distribution payable
Other creditors	Other amounts payable
Net assets attributable to shareholders/unitholders	Net assets attributable to shareholders/unitholders

The detail moves to the notes to the financial statements:

• Amounts receivable are analysed between amounts receivable on issue of units, sales awaiting settlement, prepayments and accrued income, showing amounts due from related parties (para 3.50).
• Other amounts payable are analysed between amounts payable on cancellation of units, purchases awaiting settlement, deferred income and accruals, showing amounts due to related parties (para 3.52).
• Cash and cash equivalents include instruments held to manage uninvested cash. The name, holding and value of any money market funds included must be disclosed (para 3.51).
• Current and non-current items: the balance sheet must carry a statement that all line items are current, where that is the case (para 3.53).

3. Investments and the fair value hierarchy disclosures

Investments are analysed in a note to the financial statements by each significant class of financial instrument, such as shares, debt instruments, derivatives and units in collective investment schemes, with the value of each class analysed across Levels 1, 2 and 3 of the fair value hierarchy in the same analysis (para 3.49 and Appendix C). This combines the analysis by class of instrument with the fair value hierarchy disclosure, which was previously a separate note. The SORP includes an updated illustrative example on this. The portfolio statement remains separate and continues to present the fund’s individual investments in accordance with COLL. The accounting policies should explain the basis for determining fair value and, where a valuation technique is used, the judgements applied by the ACD/AFM (para 3.61).

4. Going concern

The 2025 SORP makes explicit that the ACD/AFM must carry out a going concern assessment for each fund or sub-fund (para 1.17). Where the financial statements are prepared on a going concern basis, a statement to that effect is required, together with the disclosures in paragraph 3.8A of FRS 102, including any significant judgements made. Where an alternative basis is used, for example for a sub-fund that is terminating, the reasons must be given with the disclosures required by paragraph 3.9 of FRS 102 (para 3.59).

5. Distribution policies

The requirements in para 3.66 to describe the distribution policies that are material to the distribution are substantively carried forward from the 2014 SORP. These include explaining adjustments to net revenue/(expense) after taxation in arriving at the distribution, their consequential effect on capital, policies that apply to particular classes of units, and any changes from the previous period. The 2025 SORP clarifies that policies applying to one or more, but not all, classes of units should be identified and updates the wording from “net revenue” to “net revenue/(expense)”. Policies on charging expenses to capital, amortisation, equalisation on holdings in other schemes, stock dividends and income reserves should be reviewed against these requirements.

6. Risk disclosures

Risk disclosures remain in the notes but are aligned more closely with FRS 102, and much of the prescriptive, EU-derived guidance has been removed. A sensitivity analysis showing the impact of each type of market risk is still required (para 3.80). Quantitative exposure data is required where the carrying amounts of financial instruments are unrepresentative of the exposure to a particular type of risk (para 3.79), and analyses of currency and interest rate exposure are required where those exposures are significant (paras 3.82 and 3.83). In practice, prior-year risk disclosures should be reviewed for adequacy against these requirements rather than simply rolled forward.

7. Other report simplifications

• Distribution tables and the reconciliation of units in issue: no longer required by the SORP and the FCA has decided not to reinstate them in COLL either. ACDs/AFMs may still present them voluntarily.
• Transaction costs: the analysis of purchases and sales by asset class is removed. Totals before and after direct transaction costs, and the analysis by type of cost, remain.
• Statement of total return: the layout and terminology are aligned with FRS 102, including “net revenue/(expense) after taxation”.
• Portfolio statement: still required by COLL, but some detailed requirements, such as classifying investments by listing status, are removed.
• Interim reports: the SORP now clarifies how FRS 104 applies to half-yearly reports, including the going concern assessment.

What should ACDs/AFMs be doing now?

With December year-ends approaching, the following steps will help avoid surprises at the year-end audit.

• Confirm which funds and periods are in scope, including interim reports already published.
• Agree with the fund administrator or in-house fund accounting team how the mid-market convention will be implemented for financial statement purposes, including the price source, valuation cut-off and reconciliation to any separate dealing NAV, and quantify the expected valuation impact.
• Update the accounting policies for the valuation basis, going concern and distribution policies.
• Update the balance sheet and supporting notes and prepare a pro forma set of financial statements for discussion with your auditor ahead of the year-end.
• Review distribution policy wording, particularly for class-specific arrangements and expenses charged to capital.
• Review prior-year risk disclosures for adequacy against the revised requirements rather than rolling them forward, and consider how distribution information will reach investors if distribution tables are no longer presented.

How our authorised funds specialists can help

The transition to the 2025 IA SORP may require changes to valuation processes, financial statement disclosures, accounting policy documentation and audit preparation. Our authorised funds specialists work with ACDs and AFMs to help assess the impact of the new requirements, identify implementation challenges and support year-end reporting compliance.

If you would like to discuss how the 2025 IA SORP affects your authorised funds, contact our team.