When the Australian Accounting Standards Board (AASB) released Exposure Draft (ED) 260 earlier this year, concerns were raised over the proposed change to the way not-for-profits recognise income in financial reporting
When the Australian Accounting Standards Board (AASB) released Exposure Draft (ED) 260 earlier this year, concerns were raised over the proposed change to the way not-for-profits (NFPs) recognise income in financial reporting. Leo Tutt, audit director at William Buck, said the draft would be far too costly and technical for many smaller NFPs and charities to administer and had called on the AASB to reconsider the change.
“The last thing we want is NFPs wasting their scarce resources on complying with technical accounting standards,” he said.
Mike McDonald, principal at accounting firm Moore Stephens in Queensland, says that Moore Stephens strongly support the AASB’s decision to develop NFP-specific requirements and guidance to replace the current income recognition requirements in AASB 1004: Contributions. However, the income recognition requirements in AASB 1004, particularly the reciprocal and non-reciprocal transfer distinction, do not, in their view, currently facilitate consistent or informative reporting by NFP entities.
“We do have concerns regarding both the conceptual and practical implications of the AASB’s proposals to essentially overlay the principles in IFRS 15(Revenue from Contracts with Customers with additional recognition criteria for the purpose of application to NFP entities),” says McDonald. “If adopted, we do not believe it would facilitate improved financial reporting of income, particularly government grant funding, by NFP entities.””
For more information, see Reporting Change a Big Burden for Small Charities.
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