Group Urges Unvarying World Accounting Standards for Nonprofits

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By Steve Burkholder

April 5 — Accounting standard-setters from around the world aim for a single set of international financial reporting guidelines for not-for-profit organizations, with some saying an urgent need exists for the guidance.

The International Forum of Accounting Standard-Setters, at its April 5 meeting, moved toward creation of a working group that would devise how to go about developing such standards.

Developing Countries Need Guidance

Tamba Momoh, of Sierra Leone's accounting, auditing and institutional governance board, described the lack of consistent accounting by nonprofits as “a very serious issue” in developing countries.” Standard-setters and national authorities should “stop passing the ball,” he suggested at the forum's gathering in Toronto.

The topic of how a wide variety of not-for-profit enterprises—from mom-and-pop charities to giant hospitals run by universities to far-flung NGOs—should report their activities has bedeviled rulemakers such as the Financial Accounting Standards Board. Issues, such as how to handle grants, and basic definitional questions have proven challenging for the standard-setters.

Who Should Undertake Project?

A key question is whether the International Accounting Standards Board will be able to carry out the task and is the appropriate venue for rulemaking on nonprofits.

An IASB alternative would be to have the International Public Sector Accounting Standards Board conduct the project. If a comprehensive project were pursued by the IPSASB, it could take a long time to complete—as would a comparable effort by the IASB. IPSASB is a self-governance branch of the International Federation of Accountants, the professional group that includes the American Institute of CPAs.

Ian Carruthers, IPSASB's new chairman, suggested that non-governmental organizations and other not-for-profit entities are spending money and time addressing various regulators' reporting requirements—as well as those of their funders—when they'd rather use those resources to deliver services.

IASB Vice-Chairman Not Optimistic

For IASB to take up the cudgel would require what the staff of the London-based board calls an expansion of the panel's mandate. The IASB's parent body, the IFRS Foundation, has to clear that broadening of the group's mission. The foundation is expected to consider the issue at its next meeting, in May.

However, IASB Vice-Chairman Ian Mackintosh told the international forum April, “I wouldn't be overly optimistic at this stage. It's still up in the air.” He suggested that the views of many IFRS Foundation members, as expressed to the IASB, are that the board has enough to do in its core work of writing corporate financial reporting rules, it has limited resources and “you should stick to your knitting.”

Working Group Volunteers

At the end of the April 5 discussion on not-for-profits' accounting, forum Chairman Tricia O'Malley saw a variety of rulemakers volunteer their organization for the working group.

Those forum participants who volunteered for the accounting working group include Momoh; Carruthers; Daniel Sarmiento Pavas, of the Public Accounting Technical Council of Colombia; Linda Mezon, chair of the Canadian Accounting Standards Board; Nokuthula (Thuli) Bamuza, a senior director at the Pan African Federation of Accountants; Jeffrey Mechanick, a FASB staff accountant specializing in not-for-profit issues; and Peter Sampers of the Dutch Accounting Standards Board.

To contact the reporter on this story: Steve Burkholder in Norwalk, Conn., at

To contact the editor responsible for this story: Steven Marcy at

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