Non-profit accounting guidance out for consultation
Non-profit accounting guidance out for consultation
Plans to develop the first International Non-Profit Accounting Guidance (INPAG) for non-profits has stepped up a gear with a final consultation
This is the third and final exposure draft released by CIPFA and Humentum, which aims to address issues such as fund accounting, classification of expenses (including support costs and fundraising costs) and donor reporting formats for supplementary statements.
At present, there is no international accounting guidance for non-profit organisations.
INPAG addresses the crucial need for standardised financial reporting within the non-profit sector, an area that currently lacks specification.
It also aims to improve clarity and consistency of non-profit financial reports, resulting in greater credibility and trust in the not-for-profit sector globally.
On fund accounting, the consultation is looking for feedback on whether there should be a requirement to track income, expenses, assets and liabilities for each fund, and the costs and benefits.
The INPAG also includes a new section on supplementary information that has links to an INPAG Practice Guide 1 – Supplementary statements (Practice Guide), which is also issued for comment as part of ED3.
This practice guide provides proposals for supplementary statements that support individual stakeholder reporting requirements, including donors. There is also an important update on the definition of equity, as well as proposals for the first-time adoption of INPAG.
Rob Whiteman, CIPFA CEO said: ‘The accountancy profession plays a critical role in building trust and inspiring action within the non-profit sector.
‘The third exposure draft addresses the most pervasive issues encountered by non-profit organisations globally. I urge organisations to submit their comments, ensuring we produce the most effective guidance possible.’
Christine Sow, CEO Humentum, said: ‘This final exposure draft marks a giant leap forward in improving the quality and reliability of annual audited accounts, while reducing the reporting burden.
‘Additionally, the proposals for fund accounting and support costs provide transparency at a holistic whole-of-entity level, removing the barriers to flexible funding and full cost recovery that have been holding the sector back for decades.
‘We now call on grant makers to seize the opportunity of a generation by actively engaging in this consultation and the finalisation of INPAG, to ensure that the funding ecosystem works for everybody.’
Earlier exposure drafts were released in November 2022 and September 2023. Exposure draft 1 focused on the overarching framework for non-profit financial reporting. This included a description of the organisations and the reporting entity, and the concepts and pervasive principles that underpin financial reporting. Exposure draft 2 focused on some of the key accounting transactions relevant for non-profit financial reporting.
The closing date for comment from individuals, organisations and grant makers is 16 September 2024.
International Non-Profit Accounting Guidance INPAG - Exposure Draft 3
This article is sourced from the following link:
https://www.accountancydaily.co/non-profit-accounting-guidance-out-consultation
