New accounting standards to be developed for the not-for-profit sector

The Australian Accounting Standards Board (AASB) has agreed to undertake a major project titled ‘Disclosures by Private Sector Not-for-Profit Entities’.  The project aims to develop specific accounting standards for not-for-profit (NFP) organisations, an initiative that PilchConnect has repeatedly endorsed in previous submissions to government on NFP reporting requirements.

The AASB will be examining the adequacy of existing financial reporting obligations as they apply to NFP organisations, acknowledging that this sector would benefit from having its own accounting standards given the inherent differences it has with the for-profit world. 

The AASB announcement follows the recommendations arising from the 2008 Senate inquiry into disclosure regimes for charities and NFP organisations, which recommended (amongst other things) that:

 … a new disclosure regime contain elements of narrative and numeric reporting as well as financial, in acknowledgement that the stakeholders of the Sector want different information to that of shareholders in the Business Sector. The financial reporting should be transparent and facilitate comparison across charities. 

The AASB has indicated that there will be a 12 month scoping exercise that involves looking at overseas models, before developing an accounting standard that is specifically tailored to the Australian NFP sector.   PilchConnect will follow the progress of the AASB and maintain regular updates on the development of a NFP accounting standard on its website at www.pilchconnect.org.au.