Reporting of financial performance by entities in the not-for-profit (NFP) sector remains the cornerstone of regulatory oversight and the primary means of discharging accountability by sector participants. Notably, NFP reporting requirements are often imposed on a much wider population of the sector than their for-profit counterparts. In this context, there are several current and future developments impacting financial reporting by NFPs that are noteworthy. Some of these developments are already in play, while others are in development and likely to have an impact in the very near future.
The Australian financial reporting framework
The Australian Accounting Standards Board (AASB) project to overhaul the Australian financial reporting framework is a major initiative that has far-reaching implications for financial reporting across multiple sectors, including the NFP sector. The biggest change being proposed by the AASB is to remove the ability for entities to prepare Special Purpose Financial Statements (SPFS) in accordance with Australian Accounting Standards (AAS). Importantly, this change will not affect those entities that prepare financial statements that are not in accordance with AAS.