Magazine article Public Finance

Not for Profit Standards Go Global

Magazine article Public Finance

Not for Profit Standards Go Global

Article excerpt

Convergence between national and international accounting standards has made signifi cant progress in the past decade. Th e International Accounting Standards Board and International Public Sector Accounting Standards Board continue to work tirelessly to realise a vision of global accounting standards in the private and public sectors. However, progress in the not-for-profi t (NFP) sector has been slower, despite large levels of interest in this area.

A recent CCAB study on fi nancial reporting by NFP organisations found strong support for international standards specifi c to the sector. Th e research was based on the views of more than 600 people involved with NFP organisations in at least 179 countries. The problems around reporting in multiple jurisdictions with diff ering requirements were identifi ed. With the largest charities working internationally, these problems are increasingly prevalent.

The research acknowledges that, despite the variety in size, legal structure and focus of the NFP sector in diff erent jurisdictions, many organisations grapple with the same accounting issues that could be addressed by global standards or guidance. Problem areas include: accounting for non-exchange transactions; fund accounting; income recognition; gifts in kind; mergers; treatment of branches; and reporting on reserves.

The absence of global standards was also identifi ed as a barrier to developing highquality, appropriate standards within individual jurisdictions. Th e study documents the progress in developing and improving national fi nancial reporting standards for NFPs around the world. These are commonly based on national legislation and national generally accepted accounting practice, and the study also found that fewer than half of respondents believed that key NFP reporting and accounting issues were addressed adequately within national reporting frameworks. …

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