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The IASB decides this month whether to extend its remit to cover global NPO accounting standards – their decision will impact future levels of direct funding to Southern NGOs
To many, accounting standards probably sound very dull. However, internationally recognised NFP accounting standards would build trust between local NGOs, INGOs and donors, which is key to ensuring Southern NGOs receive a greater proportion of direct funding in future.
Increasing local funding from less than 2% to 20% of humanitarian spending hinges on trust – and standards are key to building it
As you may already know, Mango fully supports initiatives like Charter4Change, which calls for INGOs to commit to channelling 20% of humanitarian funding to local partners by 2020.
Standards are essential to honouring that commitment.
As you may also know, January marked a milestone in our long-standing campaign – we partnered with the African Academy of Sciences (AAS) to develop a pan-African standard in Good Financial Grant Practice (GFGP). Its development (including extensive consultations with stakeholders across Africa) is in full swing. Our goal is to launch GFGP globally after its pilot in 2016/17. But we need the IASB to extend its remit to cover NFP standards so that initiatives like GFGP gain the longer-term traction they need to succeed.
The IASB and NGO accounting standards: the story so far
In November last year, we highlighted the IFRS board consultation on whether the International Accounting Standards Board (IASB) should extend its remit to develop standards for the not-for-profit sector. Thanks to all fellow NGOs who joined us in submitting letters of comment in support of the move.
This month presents another critical moment, as the IFRS Foundation trustees will meet on 24 May, and will decide whether or not to recommend that the IASB extends its remit.
Given objections from influential IASB stakeholders like The International Federation of Accountants (IFAC) and the Institute for Chartered Accountants in England and Wales (ICAEW) at the consulting stage, there is a real risk that IFRS trustees will recommend that the IASB does not extend its remit as proposed.
Hundreds of stakeholders worldwide have confirmed the need for NPO accounting standards - the IASB could engage with public and third sector bodies to develop them
As mentioned in our November blog post on the issue, IFAC’s rationale for opposing the move focused on two main points:
- They had concerns about whether IASB has the membership and competencies to address not-for-profit issues, and that addressing this might detract from IASB’s core role of regulating the for-profit sector
- They thought there was insufficient evidence to show that there was a demand for international NFP accounting standards
We shared IFAC’s concern around point one, but proposed that the IASB work with International Public Sector Accounting Standards Board (IPSASB), (which has experience already of including consideration of public benefit, and organisations whose purpose is not about profit).
As for point two, there is more than enough evidence to justify the need – a study and global survey conducted in 2012, revealed an overwhelming majority in favour of standards. It also revealed that there are several issues specific to NFP accounting that current standards do not address. Interestingly this study was carried out by CCAB, a group of UK and Irish accounting bodies including the ICAEW. This begs the question as to what evidence IFAC and ICAEW had for their submissions to the IASB? The majority of accountants working in the not-for-profit sector strongly support more standardisation – but sadly their accounting bodies seem too willing to just ignore this group.
Ignoring the need for not-for-profit accounting standards is like ignoring the humanitarian crises we face and the need to localise more aid – join our campaign today. Accountants and accountancy need to serve all of society and not be restricted to serving the needs of profit-making businesses
This event is timely, as it coincides with the second and final day of the World Humanitarian Summit, where Mango will also be championing NPO accounting standards. Join us by showing your support at this key moment and beyond.
Here’s how you can get involved:
- Pledge your NGO’s commitment to the 20% by 2020 goal by signing Charter4Change
- Show your support for NGO accounting standards here (It’s very quick and painless!)
- Email us your views, and get involved in the conversation on Twitter (@Tim4Mango, @Mango4NGOs) using hashtag #Standards4NGOs
Want to learn more? See the full story here.