When non-profit organisations (NPOs) prepare their general-purpose financial statements, what format should they use? A few countries have national standards for NPOs to follow. Other countries are left trying to apply IFRS, IPSAS or other standards written for the private for-profit or public sectors, which do not address a number of issues unique to non-profits.
When non-profit organisations (NPOs) prepare their general-purpose financial statements, what format should they use? A few countries have national standards for NPOs to follow. Other countries are left trying to apply IFRS, IPSAS or other standards written for the private for-profit or public sectors, which do not address a number of issues unique to non-profits.
Given this gap in GAAP, donors frequently require reports on their specific grants in particular formats, each different from the other. This donor/grant/project focused reporting is front of mind for most NPOs, which diverts energy and effort from reporting that could more broadly meet the needs of governors, service users / beneficiaries, regulators, tax authorities and civil society. It also results in high costs of due diligence and accountability, due to duplication and inefficiency.
Theory of change:
If we co-create an internationally applicable financial reporting standard for NPOs, then funders and regulators will encourage its use by NPOs, leading to increased impact and income, and lower reporting costs for NPOs.
The IFR4NPO project was launched in 2019, and plans to issue Guidance based on IFRS for SME, in 2025.
• What will it cover?
• Who is developing it, and how?
• How authoritative will it be?
• Which NPOs is it for?
• Is the donor community on board?
Join this participatory session on 15 July to find out more about this initiative, and how you can shape the guidance development process.