The accounting basis used in the Guidance – accrual, cash or modified – needs to ensure that non-profit organisation (NPO) stakeholders’ needs are met in the simplest way possible.
The Consultation Paper has a core premise that the Guidance will be for financial statements prepared on an accrual basis for reasons explained. But some donors require cash basis reports and some NPOs may lack capacity.
Watch this explanatory video to find out more. Click on the video to view in full screen.
Deep dive
The original proposals and rationale for accrual basis guidance are set out in the IFR4NPO Consultation Paper Part 1: Chapter 3 in 2021, and explained in the video to the left.
A number of respondents to the Consultation Paper commented on this issue. The comments were summarised and addressed in a webinar in February 2022 – see this short video extract
Humentum developed a free tool to support NPOs and funders in discussing and exploring this topic, here.
Exposure Draft 3, issued in May 2024, includes INPAG Practice Guide 1: Supplementary Statements, which proposes a harmonised format that may be used for grant reporting. While prepared on an accrual basis consistent with INPAG, it aims to address some of the cash-basis information needs of donors.
