CFDG/BDO report highlights issues for charities in proposed global standards

Finance | Tania Mason | 20 Mar 2010

Charity accounts could exclude all donated goods and services under the new International Financial Reporting Standards (IFRS) proposed for small and medium-sized enterprises, which charities may have to comply with.

This is just one of the “potential big issues” contained within the proposed new standard, according to a new report outlining its possible impact on charities by CFDG and BDO.

Other potential issues include the prospect that borrowing costs could not be capitalised; mergers would have to be treated as takeovers, and related party donations would be disclosed. Also, all grants would be treated as income immediately unless there were unfulfilled performance conditions relating to the grant.

The report states that many, maybe all, of the issues may be dealt with through the new public benefit standard that is being devised or new guidance from the Charity Commission, but warns that “as things currently stand” such issues are very much live.

The report says it is important for charities to understand the key differences between IFRA for SMEs and the Charity SORP, and how the SORP requirements are to likely to change to comply with the international standards.

“Charities need to understand the implications on their own accounts and be ready to influence the debate and to prepare their own systems,” the report advised.

Directory: BDO | Charity Finance Directors' Group (CFDG)

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