Charity accountants around the world support the development of an international accounting standard for non-profit organisations, according to a report published today.
The report, entitled International Financial Reporting for the Not-for-Profit Sector, was commissioned by the Consultative Committee of Accountancy Bodies as part of a study into international accounting standards. The report is based on 605 consultation responses, mostly from charities, accountants and regulators, representing organisations working in 179 countries.
It found that 72 per cent of respondents favoured developing an international standard, compared to 14 per cent who opposed it.
It says approval for the idea is highest outside developed world countries which already have accounting systems for not-for-profit organisations, with 82 per cent of respondents in African countries supporting the idea.
It says there is currently “limited development” in most national frameworks towards a standard which was appropriate for not-for-profits.
“Particular issues exist for not-profit organisation financial reporting, such as non-exchange transactions, fund accounting issues, narrative reporting and the valuation of non-profit-organisation-specific assets,” the report says.
It also says much more work was needed to decide what sort of standard would be appropriate, and whether it should be mandatory or voluntary. But it says “the development of a formal international standard appears to command a good deal of interest”.
It says that if the standard is mandatory, one option would be to “constitute a new international standard setting body for the not-for-profit sector”, while another would be adapt existing financial standards, such as the international financial reporting standards which the standard for UK charities is based on
Ian Carruthers, chair of the CCAB study and director of policy at the Chartered Institute of Public Finance and Accountancy, said: “This report clearly demonstrates that there is desire for some kind of international standard for the not-for-profit sector, though further work is needed on what form this might take.
“Strengthening transparency and accountability, while potentially reducing costs through consistency in reporting requirements would go a long way in supporting non-profit organisations, donors and those they serve around the world.”
- Chris Harris wrote an update on this project for the Charity Finance Yearbook 2014. You can read the article here and click here to buy your copy of the Yearbook.