Issues paper asks big questions

A new issues paper asks big questions aimed at firing up debate on how financial reporting and accountability in the not-for-profit and charitable sectors can be improved.

Launched by Anglicare Australia, the ACNC and the Australian Accounting Standards Board, the paper responds to calls for improved reporting by NFPs and charities.

David Gilchrist, the paper’s author and a director of the management consultancy Baxter-Lawley, said that to pin down how better reporting in the sectors should look is problematic.

‘This report is the first step in developing an understanding of how we might move forward,’ said Dr Gilchrist.

Better Financial Reporting for Australian NFPs focuses on the transaction-neutral framework of the AASB.  It asks whether the framework meets the needs of financial-information users and whether there needs to be a more nuanced, sector-specific path.

The paper notes that it is difficult to identify users of NFP and charity financial reports and equally difficult to identify their information needs.

The paper’s aim is to start developing a reporting framework that is fit-for-purpose, resource efficient (meets a cost-benefit test), and sensitive to the relative financial risks of organisations involved.

The paper doesn’t aim to provide answers but raises a set of 13 core questions intended to facilitate discussion.

The questions are:

  1. Who are the users of NFP and charitable organisations’ financial reports?
  2. What are their financial reporting needs?
  3. Do standards support the provision of high-quality financial information to users of NFP financial reports?
  4. Do reporting arrangements allow NFPs and charities to meet their obligations in a cost-effective manner?
  5. Should volunteer time be allowed and donated assets be required to be reported in financial reports as in AASB1058; in some different way or not at all?
  6. If volunteer time and donated assets should be reported, how should they be valued and reported?
  7. Should restricted assets be separated from unrestricted assets in the statement of financial positions for NFPs?
  8. Regardless of the answer to question 7, how should restricted assets be valued?
  9. Should capital grant income be reported in the statement of financial performance?
  10. Should income relating to contracts for outcomes delivery over more than one financial period be matched to expenses incurred on an annual basis if the income is not at risk?
  11. Should a different test be applied to NFP and charitable organisations to determine whether consolidation should be undertaken?
  12. Are the income levels appropriate segregation points for differentiating reporting requirements?
  13. Should there be more tiers added? If so, how should they be segregated and what should they be required to report?

< Back