Charities have been invited to share their views on the final draft of the world’s first international accounting standards.
Earlier this week, the Chartered Institute of Public Finance and Accountancy (CIPFA) and Humentum released the third exposure draft of the international non-profit accounting guidance (INPAG) for non-profit organisations (NPOs).
The organisations began developing INPAG through the IFR4NPO project in 2019, as there is currently no international accounting guidance for NPOs.
INPAG to address lack of standardised reporting
CIPFA and Humentum said that INPAG will address “the crucial need for standardised financial reporting within the non-profit sector, an area that currently lacks specification”.
“It also aims to improve clarity and consistency of NPO financial reports, resulting in greater credibility and trust in the not-for-profit sector globally,” they said.
The final draft is open for public comment until 16 September and will focus on issues such as fund accounting, classification of expenses (including support costs and fundraising costs) and donor reporting formats (supplementary statements).
It follows two previous drafts released in November 2022 and September 2023.
The first draft looked at the overarching framework for NPO financial reporting while the second focused on key accounting transactions.
Final exposure draft is ‘giant leap forward’
Rob Whiteman, chief executive of CIPFA, said: “The accountancy profession plays a critical role in building trust and inspiring action within the non-profit sector.
“That’s why CIPFA is delighted to be working jointly with Humentum to pioneer the first-ever international financial reporting guidance for NPOs.
“The third exposure draft addresses the most pervasive issues encountered by NPOs globally. I urge organisations to submit their comments, ensuring we produce the most effective guidance possible.”
Christine Sow, chief executive of Humentum, said: “This final exposure draft marks a giant leap forward in improving the quality and reliability of annual audited accounts, while reducing the reporting burden on NPOs.
“Additionally, the proposals for fund accounting and support costs provide transparency at a holistic whole-of-entity level, removing the barriers to flexible funding and full cost recovery that have been holding the sector back for decades.
“We now call on grantmakers to seize the opportunity of a generation by actively engaging in this consultation and the finalisation of INPAG, to ensure that the funding ecosystem works for everybody.”
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