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Financial reporting: accounting bodies speak up for not-for-profits
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At a recent round table meeting, industry leaders joined the Institute and other accounting bodies in calling for accounting standards to better reflect the work of not-for-profit entities.  
 
The Australian Accounting Standards Board (AASB) and Financial Reporting Council (FRC) were asked at the meeting to work together on several issues, including:

  • Reviewing the current 'reporting entity concept' and considering appropriate differential disclosure and reporting
  • Providing a clear definition of a 'not-for-profit' organisation and the typical users of their financial report
  • Prescribing a common format for the preparation of reports containing both financial and non-financial information
  • Amending AASB 101: Presentation of financial reports to reflect the specific information needs, activities and funding sources of not-for-profits
  • Replacing the shareholders equity statement with a 'statement of service potential'
  • Providing additional guidance on accounting for contributions (e.g. donations and grants). This may require amending AASB 1004: Contributions and AASB 118: Revenue.
Background 
The FRC is seeking comments on a report reviewing the current approach to accounting standard setting in Australia. The report examines the issue of financial reporting for the not-for-profit sector, and is now open for comment. 
 
At present, Australia primarily has a single set of accounting standards that apply across the board. The FRC’s report identifies alternative options for standard-setting including:
  • Two or more different sets of standards
  • Options for a not-for-profit series of standards as part of a two sets of standards scenario
  • Alternative approaches to a single-set of standards
  • The possibility of more than one board
  • Options to enhance the current approach.
For more information: 
 
Last updated: 25 October 2006