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The Chartered Institute of Public Finance and Accountancy (CIPFA), together with Humentum, has published the third and final exposure draft of the world’s first-ever International Non-Profit Accounting Guidance (INPAG) for non-profit organisations.The draft aims to address issues such as fund accounting, classification of expenses (including support costs and fundraising costs) and donor reporting formats.
At present, there is no international accounting guidance for non-profit organisations. According to CIPFA, INPAG “addresses the crucial need” for standardised financial reporting within the non-profit sector, an area that currently lacks specification.
It also aims to improve clarity and consistency of NPO financial reports, “resulting in greater credibility and trust in the not-for-profit sector globally”.
The publication follows the first and second drafts released in November 2022 and September 2023, respectively. Exposure Draft 1 focused on the overarching framework for NPO financial reporting, while Exposure Draft 2 focused on some of the key accounting transactions that are relevant for NPO financial reporting.
Rob Whiteman, CIPFA CEO said: “The accountancy profession plays a critical role in building trust and inspiring action within the non-profit sector. That’s why CIPFA is delighted to be working jointly with Humentum to pioneer the first ever international financial reporting guidance for NPOs.
“The third exposure draft addresses the most pervasive issues encountered by NPOs globally. I urge organisations to submit their comments, ensuring we produce the most effective guidance possible.”
Christine Sow, CEO Humentum, added: “This final Exposure Draft marks a giant leap forward in improving the quality and reliability of annual audited accounts, while reducing the reporting burden on NPOs.
“Additionally, the proposals for fund accounting and support costs provide transparency at a holistic whole-of-entity level, removing the barriers to flexible funding and full cost recovery that have been holding the sector back for decades. We now call on grant makers to seize the opportunity of a generation by actively engaging in this consultation and the finalisation of INPAG, to ensure that the funding ecosystem works for everybody.”
CIPFA added that individuals, organisations and grant makers should submit comments on Exposure Draft 3 before 16 September 2024.
