THE INTERNATIONAL ACCOUNTING GUIDE FOR NONPROFIT ORGANIZATIONS

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A year ago, a draft was issued concerning the International Accounting Guidelines for Non-Profit Organizations, published by the Instituto Colegiado de Finanzas Públicas y Contabilidad (CIPFA) (Chartered Institute of Public Finance and Accountancy) with the purpose of receiving comments, which were due to be submitted by March 31, 2023, to this Institute.

These International Guidelines are the exclusive property of the IFRS Foundation and IFAC, bodies that have approved their reproduction and retain all rights reserved.

These are the first International Guidelines for organizations like these and have been subject to consultation opinions since January 2021. For this reason, the International Financial Reporting Standards for SMEs are used as a reference.

The rationale behind this project is that in countries where Non-Profit Organizations exist, there is lack of an accounting framework for their record-keeping and the issuance of their financial statements. In many cases, this financial information is required by the Organization established in a country: the headquarters or executive offices, with offices established in other countries. These organizations must annually send their financial management reports to the head office.

It is important for non-profit organizations to adopt an accounting regulatory framework to instill confidence in their donors and thereby reinforce their corporate governance.

This type of International Guide will enable organizations to enhance Quality, Confidence, and Comparability, three crucial pillars for ensuring donors that their donations are well-managed and contributing to humanitarian, social, artistic, and community projects in the countries where they operate.

These three pillars will allow Non-Profit Organizations to enhance quality, transparency, and financial credibility, have suitable financial information for their corporate governance decision-making, and with the comparability of financial information, enable third parties interested in understanding or identifying variations in accounting and its records.

According to the draft of these International Accounting Guidelines for Non-Profit Organizations, the initiative can be developed in 2025 according to the following stages, Stage 1: Framework and Priority Issues; Stage 2: updates and remaining issues. Ongoing updates can be considered as a follow-up to these stages.

It is important for our TGS offices worldwide to become familiar with this new project or proposal for preparing financial statements in Non-Profit Organizations to comprehend key concepts and principles, the basis of information, fund accounting, the scope of financial statements, the type of narrative reports, service potential, additional information, and compliance with the International Accounting Guidelines for Non-Profit Organizations.