New not-for-profit accounting standard needs more work

A proposed accounting standard for “public benefit’ organisations is a step in the right direction but should be improved before its introduction, the Institute of Chartered Accountants in England and Wales (ICAEW) has said.

The institute was responding to a draft financial reporting standard for public Benefit Entities (FRSPBE), issued by the Accounting Standard Board. A consultation on FRSPBE closed on 31 July. The ASB has proposed that the standard will come into force on 1 July 2013.

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Paul Scholes's picture

Charity commission response

Paul Scholes | | Permalink

It's also worth a read of the joint response (PDF) made by the Charity Commission & Office of the Scottish Charity regulator as they concentrate on the thorny issue of goods donated for sale to charity shops and how trying to value these on receipt of the goods rather than sale of them, is going to be of no real benefit.

They also highlight the point that the market value of some donated services may actually be far more than they would have paid should they have had to buy in the service.  For example we do the bookkeeping for a small charity and a full market value of our work might be £10K pa whereas we charge £2K, should they therefore overstate their income and expenditure by £8K or ascertain that the same work could be done by an experienced bookkeeper for say £5K and include that instead?

Having said all this I don't see that, in reality there will be long-term problems with all of this, I agree with the need to bring accounting practice in line across the PBE sector and to make it comparable with the commercial sector and feel that there is sufficient leeway for application of judgment and reasonableness to enable bedding in over a number of years.

As to the timescale, on the face of it making it mandatory for accounting periods commencing after July 2013 is not unreasonable however I suppose we will be faced with comparative restatement meaning that we will have to start considering the effects on accounts beginning after July next year?  Not the end of the world and keeps us in business or donating.