CA ANZ and CPA Australia have welcomed the AASB’s proposals to provide a clearer and more robust definition of the term “not-for-profit.” The current definition, found in AASB 102, 116 and 136 defines an NFP only as “an entity whose principle objective is not the generation of profit”, a definition that no longer adequately describes the NFP entities that operate in Australia.
The revised definition proposals, set out in AASB ED 291, have been based on the New Zealand definition of a “public benefit entity”, and its accompanying guidance. Suitably Australianised, they should provide a better foundation for the AASB’s current work to develop a separate, fit-for-purpose NFP financial reporting framework in the near future.
However, the submission calls for amendments to the implementation guidance which needs to more accurately reflect the current Australian legislative framework for NFPs. It also recommends that the proposals should not be implemented ahead of the AASB’s current NFP reporting framework reform work to which it relates. This will ensure easier identification of any other implementation issues that could hinder the effective operation of a new consistent and comparable reporting framework for NFPs.