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NOT-FOR-PROFIT SECTOR

The AASB continued its work for the not-for-profit (NFP) sector through a variety of projects and updates. We updated the Staff Paper, Modifications to Australian Accounting Standards for Not-for-Profit Entities, so stakeholders could better understand the extent and rationale of modifications made to Australian Accounting Standards for entities in the NFP private and public sectors.

We also published our 14th Research Report, titled Literature Review: Service Performance Reporting for Not-for-Profits, which reviewed both Australian and international literature surrounding service performance reporting for NFP entities. Under the Australian reporting framework, disclosure of service performance information is mostly unregulated for private NFP entities. Due to a general lack of emphasis on non-financial information in both Commonwealth and state legislation, the efficiency information being reported by NFP entities is insufficient to meet users’ needs. For charities, stakeholders compare their overall objectives with the service performance information disclosures. Appropriate guidance is required for mandatory disclosures on how to link efficiency information to mission-related objectives or long-term goals.

New disclosure requirements for NFP private sector entities preparing SPFS were also proposed by the AASB, came into effect as of 30 June 2020. The quality of disclosures in a significant number of SPFS are not sufficient to enable a user to determine what additional information they might need, with research indicating that for 44% of medium and large charities lodging SPFS with the Australian Charities and Not-for-Profits Commission (ACNC), it was unclear whether or not they complied with the recognition and measurement requirements in Australian Accounting Standards. These new disclosures will provide more transparency for SPFS available on public record.