In a joint submission CA ANZ and CPA Australia have supported initial proposals for the development of internationally applicable financial reporting guidance for NFPs. The International Financial Reporting for Non-Profit Organisations (IFR4NPO) project is being led by Humentum (a global non-profit focusing on improving standards in the NFP sector) and the Chartered Institute of Public Finance and Accountancy (CIPFA). This is the first submission of a two-part consultation that’s sets out the broad principles for the development of the guidance. Part 2 addresses the specific accounting requirements the guidance should contain, for which submissions are due 24 September.

Our submission on Part 1 recognises that there is need for well recognised and consistent reporting guidance for NFPs globally. The inconsistencies , which are apparent at both a jurisdictional level between Australia and New Zealand, at a transaction level and a reporting level divert the sector’s scarce resources from its key missions and do not effectively allow NFP financial reporting to achieve important communication objectives clearly and consistently.

Therefore, the submission supports the plans to use an existing international framework as the base for the guidance and agrees that the IFRS for SMEs standard is the most appropriate to begin with, given that it is a single comprehensive standard with a specific target audience and simplified requirements. However, it encourages the project to leverage the wide range of resources and experience that already exist in both Australia and New Zealand in adapting international public and private sector standards to the needs of NFPs. 

While the existence of robust NFP reporting frameworks in both Australia and New Zealand does mean that the outcomes of this project will not immediately change existing requirements in either country, CA ANZ recognises that the IFR4NPO project has the potential to substantially and cost effectively improve reporting by NFPs worldwide.