Global Study to Improve Accounting in Not-for-Profit Sector

27th February 2014

The findings of the first ever global study looking at improving international financial reporting for not-for-profit organisations (NPOs) led by Sheffield Hallam University will be presented in the House of Commons today.

Experts from the University were commissioned by the Consultative Committee of Accountancy Bodies (CCAB) to conduct the comprehensive study, alongside colleagues from the University of Dundee's School of Business, to establish whether there is a need for developing stronger and more harmonised international standards for NPO financial reporting. Many charities and NPOs operating across the globe face regulatory and legislative demands that are often made more complex by the lack of an agreed approach to NPO-specific financial reporting. The research team examined key issues relating to international financial reporting standards in the not-for-profit sector and the report will be officially launched at an event hosted by Catherine McKinnell MP, Shadow Economic Secretary to the Treasury, at the House of Commons today. This is the first significant research of its kind and was based upon a literature review and online survey, which received more than 600 responses from 179 countries. The study has shown an appetite among NPOs for an international standard for financial reporting, with 72% of respondents agreeing that a standard of some kind would be useful. Based upon the research, CCAB have called for a further study in this area and for consideration to be given to what an international financial reporting standard for the NPO sector should look like. Leading the study, Gareth Morgan, professor of charity studies and leader of the Centre for Voluntary Sector Research at Sheffield Hallam University, said: "Issues of charity accounting and reporting have long been central to our research at Sheffield Hallam so we were delighted to be awarded the contract by CCAB to lead an international study with three other universities to gauge attitudes to the need for international standards for financial reporting by NPOs. "The case for this has now been largely accepted for commercial entities, but our task was to consider whether a similar argument also applies to NPOs. -This has been an incredibly exciting research project with the potential for significant, positive impact.  The level of detail in the comments from the international respondents was remarkable with strongly expressed views both for and against the idea of an international NPO financial reporting standard.  We are delighted that, through this research, we have been able to involve the international NPO community in any policy-making decisions, right from the start." The team of researchers from Sheffield Hallam and Dundee were supported by colleagues from the University College Dublin and Victoria University of Wellington in New Zealand. Ian Carruthers, chair of the CCAB study and Director of Policy at the Chartered Institute of Public Finance and Accountancy (CIPFA) said: -This report clearly demonstrates that there is desire for some kind of international standard for the not-for-profit sector. -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. The full report and further information can be found at http://www.ccab.org.uk/documents/IFRNPO-FullReport-Final-07022014.pdf.