Accounting standards for not-for-profit entities

Summary of changes made to accounting standards for not-for-profit entities

The Australian Accounting Standards Board (AASB) has issued a useful Staff Paper summarising what Australian-specific changes have been made to each Australian Accounting Standard to cater for not-for-profit entities (NFPs), and the reasons for making these changes.

Why are changes made to standards for NFPs?

The Staff Paper notes that the AASB aims to make accounting standards ‘transaction neutral’ whereby transactions and events are accounted in the same way for all types of entities (i.e. for-profit and not-for-profit).

However, the AASB modifies IFRS standards for NFPs such as charities and public sector entities ‘to address, as necessary, user needs, prevalence and magnitude of issues specific to the NFP sector, NFP application issues and undue cost or effort considerations’.

How are Australian modifications identified?

Australian modifications for NFPs are identified by ‘Aus’ paragraphs within the standards, or in some cases, are located in specifically labelled appendices or examples.

Summary of modified standards

Table 1 of the Staff Paper summarises, via the use of dots, where changes have been made to each accounting standard for NFP considerations across the following areas:

  • Scope
  • Recognition
  • Measurement
  • Presentation
  • Disclosure
  • Defined terms, and
  • Australian guidance.

Table 2 lists out all Australian-specific topical standards where there is no international counterpart. These include standards relating to government such as AASB 1004, AASB 1049, AASB 1050, AASB 1051, AASB 1052 and AASB 1055, as well as the new income recognition standard for all NFPs, AASB 1058 Income of Not-for-Profit Entities.

The rest if the paper then lists each requirement that has been modified or added, as well as the reasoning for each departure.