As explained in the IFR4NPO Consultation Paper here, a core premise is that the Guidance should be for financial statements prepared on an accrual basis. Many NPOs around the world currently maintain their bookkeeping / accounting records or prepare donor reports on a cash or modified basis.
Humentum’s Accounting Basis Diagnostic Tool gives NPOs and donors a detailed understanding of where their current practice and requirements fall, particularly within the spectrum described as ‘modified cash’. NPOs and donors can use the tool to make strategic choices about how to develop their bookkeeping and project / grant reporting practice. Those transitioning towards accrual accounting can identify the steps to take.
The tool also includes some worked examples for how, pragmatically, an NPO might allocate costs to donors on a cash basis while maintaining accrual basis accounts overall.
Download the Excel tool and explanatory power point slides below:
The Humentum website contains a range of free resources relating to financial management which can be accessed here.