Not-For-Profit Accounting is the accounting related to non-profit organisations. Australian Accounting Standards are sector-neutral in that they are applicable to both ‘for-profit’ and ‘not-for-profit’ entities (‘NFPs) in Australia. There are, however, a number of requirements included within Australian Accounting Standards which are specific to ‘Not-For-Profit Entities’ and which affect recognition, measurement and disclosure of transactions within financial statements.
The purpose of modifying accounting standards to accommodate NFPs is to recognise the differences between the sectors which include acknowledging that users of the financial statements of NFPs may have different information needs and which may warrant different accounting treatment.
The distinction between ‘for-profit’ and NFPs is therefore a significant aspect of the Australian Financial Management and accounting framework. A NFP is currently defined as an “entity whose principal objective is not the generation of profit”. The definition is designed to capture a wide range of entities including sporting clubs, charities, community groups and unions, however its application is open to interpretation by entities.
Differing accounting treatment for NFPs are noted in Not-For–Profit Accounting standards for areas such as:
For reliable Not-For- Profit Accounting, contact B B Whitehouse Group now. You can talk to our Accountants in Brisbane or Toowoomba, and service clients all over Australia.