CPA Australia recently surveyed its members on the effectiveness of the Australian Accounting Standards Board (AASB)'s current definition of not-for-profit (NFP) entities. Over 800 public sector, academic, and not-for-profit entity CPA Australia members responded, revealing that the definition has some shortcomings. 
 
The AASB defines an NFP entity as one whose principal objective is not to generate profit. This definition fails to capture five of the six criteria that CPA Australia members considered essential to defining an entity as a NFP. 
 
The six criteria were:

• its operating purpose is other than to provide goods or services at a profit 
  
• its principle objective is not the generation of profit  
  
• it may not distribute surpluses  
  
• generating profit is not an objective outlined in its legislation, associated regulations or constitution  
  
• it does not pay income tax or income tax equivalents  
  
• it is not able to transfer ownership