Survey finds strong global support for financial reporting standard for not-for-profits

A study by the accounting umbrella body CCAB finds that three-quarters of charities believe such a standard would be useful

Accounting: international standard popular
Accounting: international standard popular

Almost three-quarters of charities around the world think the development of an international standard for financial reporting for not-for-profit organisations would be useful, new research shows.

Researchers for a study commissioned by CCAB, the umbrella body for the five accounting bodies in the UK and Ireland, surveyed 605 people working for not-for-profit organisations around the world about the possibility of an international financial reporting standard for the sector.

International Financial Reporting for the Not-For-Profit Sector, published today, reports that 72 per cent of respondents said it would be useful to develop such a standard.

The study says many respondents would welcome an international standard if it could help resolve the "diverse and inconsistent demands from funders". But 14 per cent of respondents were opposed to such a standard, it says.

The study says that the strongest objections appeared to come from countries, including the UK, that already have well-developed frameworks for not-for-profit accounting.

Sixty-four per cent of respondents involved in European not-for-profit organisations supported the idea, compared with 82 per cent in African countries.

The research, led by Gareth Morgan from Sheffield Hallam University and Louise Crawford from the University of Dundee, is the first step towards establishing whether or not there is a case for developing harmonised international standards for financial reporting in the not-for-profit sector.

The study points out that one of the limitations of the exercise was that the respondents were self-selecting, so the research might have attracted those who were already receptive to the idea of an international standard for not-for-profit reporting.

The survey did not try to establish what form any such standard might take.

The report suggests several possible ways forward, including further research to work out what any standard might look like.

Ian Carruthers, chair of the CCAB Project Steering Group and director of policy at the Chartered Institute of Public Finance and Accountancy, said the report demonstrated there was an appetite for an international reporting standard for the not-for-profit sector, though further work was needed on what this might look like.

"Strengthening transparency and accountability, while potentially reducing costs through consistency in reporting requirements, would go a long way in supporting NPOs, donors and those they serve around the world," he said.

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