It's a busy time in the accounting world. An Accounting Standards Board consultation on the future framework of UK accounting has already opened and March will see the launch of the ASB's consultation on its proposals for a Public Benefit Entities Standard.
This standard, based on a scaled-down version of the International Financial Reporting Standards, sets out what is different for public benefit entities. It is a welcome recognition that accounting standards developed for the commercial world, whose key indicator of success is profit, cannot provide all the answers for a sector that aims to deliver public benefit.
The ASB's work recognises the importance of the voluntary sector, so we should all welcome its efforts and help ensure the standard is relevant to the needs of the sector. Indeed, given the existing infrastructure of accounting standard setting in the UK and globally, borrowing from and adapting commercial standards is the only way forward in the short to medium term.
However, we shouldn't sacrifice longer-term aspirations for a distinct accounting framework for the voluntary sector in the UK and beyond. The voluntary sector is differentiated from the commercial world by its motive, use of resources, funding and the constituency of its stakeholders, including the reliance on volunteers. Assets aren't held simply to generate cash, and profit does not equate to success.
Accounting standard setters see the need for a conceptual framework to underpin the development of their guidelines. The question is whether, in the long term, the voluntary sector needs to press those people towards such a development in the context of public benefit accounting.
The International Public Sector Accounting Standards Board is taking steps to develop a framework that makes explicit the concepts, definitions and principles that underpin the development of standards for government accounting around the world. This demonstrates a recognition that sectors differ conceptually and that these differences need to be reflected in their financial reporting.
It is not my intention to downplay the progress being made through the ASB's work on developing a Public Benefit Entity Standard. I just hope it acts as a springboard for even more ambitious plans for the future.