Welcome to the August edition of the IFR4NPO Newsletter!
We are gearing up for publication of International Non-Profit Accounting Guidance (INPAG) Exposure Draft 2 in September 2023, which will be open for public consultation until the 15 March 2024. Concurrently, we are progressing with proposals for topics that will be addressed in INPAG Exposure Draft 3, which is due for release in April 2024.
In this edition, I am pleased to bring you the latest updates on the IFR4NPO Governance Group and introduce our new Country Champions, share a survey on ‘Equity in NPOs’, invite you to our upcoming Focus Group Discussions, share updates from our Advisory Groups, and explore the link between INPAG and cost recovery.
As always, your engagement and support are vital to the success of this project.
In preparation for Exposure Draft 3, we will be consulting with preparers and users of financial statements through three focus group sessions in August and September 2023.
These sessions will focus on the Classification of Expenses, Fund accounting, and Fundraising costs. We are keen to have preparers and users of NPO financial statements in attendance, as well as auditors, consultants working with NPOs, and other stakeholders with relevant knowledge and expertise in these topics.
If any of these topics interest you, please request an invitation using this link.
Based on feedback received to date, we have heard that it is not common for Non-profit Organisations (NPOs) to issue equity instruments, such as shares, leading to the absence of equity claim holders.
However, in the uncommon instances where NPOs do possess equity instruments, the rights of equity claim holders are not entirely clear. The extent of their entitlements to the NPO’s net assets remains uncertain.
Due to this, we have created a survey to help identify the characteristics of equity claims and their potential use in the NPO sector. If the organisations you work with or have worked with have any form of equity claim, we would love to hear from you.
Please click on the link to access the 10-question survey.
We warmly welcome Hernan Casinelli and Thomas Hilbink to the IFR4NPO Governance Group and look forward to their valuable contributions in guiding the future of financial reporting for NPOs worldwide. We would like to express our appreciation to those who took the time to share their interest in joining the Governance Group.
Our heartfelt thanks go to John W. Bernstein, who has recently stood down from this group, for his vital support and guidance since the earliest days of the project.
Learn more about the Governance Group and our new members here.
We are thrilled to welcome the new Country Champions pictured below. They join a dedicated group of individuals who play a pivotal role in bolstering engagement and raising awareness about the project within their respective countries. Click on the image to learn more about them.
With their help, we are making strides towards ensuring diverse and relevant voices have input into the development process.
On 11 July 2023, CPA Caroline Kariuki, delivered a presentation at the Financial Management for Not-For-Profit Organizations (NPO) Conference organised by ICPAK (Institute of Certified Public Accountants of Kenya). The presentation focused on project updates and feedback from International Non-Profit Accounting Guidance (INPAG) Exposure Draft 1. It was a great opportunity to raise awareness for both new and existing stakeholders in Kenya. We appreciate ICPAK for providing us with this opportunity.
This news and other resources can be found on our X platform (formerly known as Twitter). Please follow the project to get the regular updates we post there.
One aspect of the requirement for international due process is the transparent sharing of proposals and discussions during the development process.
Recent meetings included discussions on recognition of grant revenue, measurement of donations-in-kind, expenses on grants and donations, foreign exchange, classification of expenses, and Supplementary Statements. You can find links to meeting resources below:
• Technical Advisory Group (TAG) meeting: 27 June 2023 (Video recording and ‘Advice & Requests’ added)
• Practitioner Advisory Group (PAG) meeting: 7 June 2023 (Discussion summary added)
‘Cost recovery requires a comprehensive understanding of all costs involved. This requires thorough measuring and tracking of all expenses throughout the year. By doing so, organisations can provide greater transparency to funders, making a compelling case for covering all costs.’
This is according to Shila Nhemi, Humentum’s Technical Director, Risk and Compliance.
What is the link between recovery of indirect support costs and IFR4NPO?
INPAG Exposure Draft 3 will provide guidance on expenditure classification in general-purpose financial reports and include proposals for supplementary information that may be useful for funders as well as other users of general-purpose financial reports.
Both will include proposals for support costs. This guidance could provide much needed harmonisation and structure to support cost recovery calculations and negotiations.
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Thanks for taking the time to read our newsletter – I’d love to hear your comments or reactions. Please follow us on LinkedIn, X and YouTube to stay connected. If you received this newsletter from someone else, please subscribe to stay in touch.
I look forward to connecting with you next month!
– Samantha Musoke, IFR4NPO Project Director, Humentum
