Last week, the world's thoughts turned once more to pancakes. Whether you celebrated the occasion as the day before Lent, using up rich foodstuffs as a precursor to a period of fasting, or you saw it as just a fun day in your household, most people will have attempted to make (and probably toss) this simple delicacy. (Don't worry, this is still the finance column, not some peculiar food guide.)
Traditions and preferences have led to a multitude of approaches to pancakes. Some go for thin, large ones, which they drizzle with sticky syrups or lemon juice and sugar. Others prefer little thick, fluffy ones. Some even like theirs with bacon. Whatever the local variations, the basic ingredients are the same the world over. 'Pancake' is shorthand. Whether you order in Cape Town or Colwyn Bay, you have a reasonable idea of what to expect. And that is reassuring.
But in the financial world, can you say the same about reporting and accounting? We lack a similar shorthand reference. When we talk about the 'not-for-profit' sector, we're thinking of organisations whose primary objectives are to provide goods or services for public, community or social benefit. We accept that if any equity is provided, it's there to support the primary objectives rather than give a financial return to shareholders. But terms are not universal and different legal frameworks exist. When comparing financial performance of these organisations across the world, can you honestly say that, but for the variations in local approaches and 'ingredients', you generally know what you're getting?
On 2 July 2012, the Charity Finance Group instigated a symposium to bring together professional bodies, charities and the accounting profession, British and international, to debate the need for an international accounting standard for not-for-profit organisations. Around the world, accountability is key to donors and beneficiaries alike, but this is impeded by a lack of a shared understanding or commonly held set of terms saying what not-for-profit accounts should look like.
Two years later, on 25 February this year, the Consultative Committee of Accountancy Bodies published the first authoritative study of attitudes towards international reporting standards for not-for-profit organisations. It concluded that there was an appetite not only for stronger financial standards, but also for greater consistency in reporting. Above all, it said, an international standard could create consistent expectations among donors.
As with pancakes, we could lay claim to the UK being the origin of the accounting framework for the sector. Certainly, our basic approach has been transferred, built on and adapted across the globe. Funding of not-for-profit organisations increasingly crosses international borders. As a result, we face a multitude of different grant regimes, funding models and reporting requirements - all made more complex by the absence of an agreed financial planning and reporting framework.
What are my key ingredients for an international standard? Accountability, transparency and consistency. But I'd want to see a degree of flexibility that could accommodate the variety of approaches, flavours and additional ingredients traditional to a specific region. Our greatest challenge will be achieving genuine comparability while accommodating regional needs and differences. This should not be about imposing lemon juice on all, but about recognising that some like their pancakes with bacon.
Caron Bradshaw is chief executive of the Charity Finance Group