Development of simplified accounting requirements for smaller not-for-profit private sector entities

Friday, September 30, 2022

AASB has released a Discussion Paper – Development of Simplified Accounting Requirements (Tier 3 Not-for-Profit Private Sector Entities)

The not-for-profit sector plays a vital role in Australia and the effects of the pandemic have shown the resilience of not-for-profit entities in continuing to deliver their services to the Australian community. Yet, the pandemic has also placed a significant strain on not-for-profit entities' existing and future resources that are crucial for their continued operations. Financial statements play an important role for not-for-profit entities – from helping an entity manage limited resources to being an effective communication and accountability discharge tool.

?Recent developments in the financial reporting environment including an increase in reporting thresholds for charities, and the Australian Charities and Not-for-profit Commission's (ACNC) ongoing efforts in harmonising ACNC, state and territory regulatory requirements have seen improvements in the reporting framework for many not-for-profit private sector entities.

?However, many stakeholders still consider the Australian reporting requirements overly complex to apply by smaller not-for-profit private sector entities. They have called for a change to the not-for-profit financial reporting framework.

?The AASB has issued a Discussion Paper –?Development of Simplified Accounting Requirements (Tier 3 Not-for-Profit Private Sector Entities)?as the first step in revising the not-for-profit financial reporting framework.

?The Discussion Paper proposes developing a stand-alone accounting standard containing the accounting requirements for smaller not-for-profit private sector entities. At the same time, the Board will also consider removing the ability for not-for-profit private sector entities to prepare special purpose financial statements in the future. These proposals are expected to provide simpler accounting while improving the comparability and quality of financial reporting, and reducing costs for smaller not-for-profit private sector entities.

?The consultation provides an opportunity for interested stakeholders to help shape the financial reporting framework, contribute to developing simpler accounting requirements and reduce preparation costs for smaller not-for-profit private sector entities. We encourage all not-for-profit stakeholders to get involved by:

·????????completing the online survey at https://www.surveymonkey.com/r/AASBTIER3NFP;

·????????attending a planned virtual outreach session from October 2022 to March 2023;

·????????making a written submission; or

·????????reaching out to the AASB directly at [email protected].

?For more information including how to register for the outreach events, head to our Hot Topics page here.