Scope of standards

This section focuses on the scope of the accounting standards and reporting framework which are applicable to NFPs within each jurisdiction.

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Australia

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

Any organisation that is required to, or elects to, prepare general purpose financial statements (GPFS).


Are there any further specific financial reporting requirements for organisations included within this scope?

No.


Do standards or guidance only apply to NFPs beyond certain thresholds?

The Standards do not include reporting thresholds, but these are generally specified by other regulators.

The Australian Charities and Not-for-profits Commission (ACNC) has reporting thresholds based on revenue in excess of AU$250,000 in any particular financial year.


Narrative reporting

No.


Cash accounting

No.  Accrual accounting is required for any general purpose financial statements (GPFS).



Canada

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

Private sector NFPOs are those NFPOs that are not public sector (government) NFPOs.  These apply the standards in the CPA Canada Handbook – Accounting and include:

  • Member benefit organisations (those that exist for the benefit of its members) such as:
    • private clubs (eg golf, car, social and dining)
    • sports associations (eg local hockey organisations)
    • professional associations (eg CPA Canada and Canadian Bar Association)
    • business associations (eg Chamber of Commerce)
    • trade unions (eg Teamsters Canada).
  • Public benefit organisations (those that exist for the benefit of the public) such as:
    • charities
    • churches
    • museums
    • universities.    

Public sector NFPOs include those NFPOs that are controlled by governments.  These apply the standards in the CPA Canada Public Sector Accounting (PSA) Handbook. These organisations may include Schools, Universities, Colleges and Hospitals as well as other public benefit organisations such as charities and museums.


Are there any further specific financial reporting requirements for organisations included within this scope?

No.


Do standards or guidance only apply to NFPs beyond certain thresholds?

No.


Narrative reporting

No.


Cash accounting

No. Accrual accounting is required.



Are there any further specific financial reporting requirements for organisations included within this scope?

No


Do standards or guidance only apply to NFPs beyond certain thresholds?

The Standards do not include reporting thresholds, but these are generally specified by other regulators.

The Australian Charities and Not-for-profits Commission (ACNC) has reporting thresholds based on revenue in excess of AUD 250,000 in any particular financial year.


Narrative reporting:

No


Cash accounting:

No.  Accrual accounting is required for any GPFS.


Colombia

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

All NFPOs have to keep accounting records under the corresponding framework.


Are there any further specific financial reporting requirements for organisations included within this scope?

It depends on the sector which the NFPO belongs to. If it is under supervision, then the superintendency in charge asks for special reports.


Do standards or guidance only apply to NFPs beyond certain thresholds?

Yes.

It depends of the group to which the NFPO belongs. If it belongs to Group 3, it means it is a micro size entity (assets <US$120,000 income <US$1.43m and less than ten employees), applies a national standard; if it is part of Group 2, it applies IFRS for SME and if it belongs to Group 1, applies full IFRS. Group 1 is formed for big entities  with some special requirements related to international origin of its income or international destiny of its expenses and investment relationships with other entities belonging to Group 1, and public interest entities.

Big entities for these purposes in Colombia are those with assets more than US$7.170m or more than 200 employees.


Narrative reporting

Yes. 

Those that are included in the applying standards.


Cash accounting

No.

France

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

The organisations within the scope are:
  • associations, foundations, endowment funds
  • some mutual insurance entities
  • employee representative committees
  • unions.


Are there any further specific financial reporting requirements for organisations included within this scope?

Associations or foundations, with access to the public generosity, must prepare an annual statement for the annual use of resources collected.


Do standards or guidance only apply to NFPs beyond certain thresholds?

Yes.

Associations and foundations are required to implement the associations and foundations accounting plan (CRC regulation 99-01), based on the general accounting plan (ANC regulation n° 2014-03), when they meet one of the following conditions :

1. To exceed two of the three  following thresholds:

a. revenues: €3.1m
b. total of balance sheet: €1.55m
c. 50 employees, or

2. To receive more than €153,000 public grants, or

3. To be a foundation recognised as being of public interest or a corporate foundation, or

4. To receive more than €153,000 donations that give right to tax relief, or

5. To be required by law or regulation to draw up annual accounts.


If they do not meet the conditions, the accounting regulation is optional (and widely used).


Non-financial/narrative reporting

No.


Cash accounting

No.

Accrual accounting is required for any GPFS.


Non-financial/Narrative reporting:

New Zealand

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

The External Reporting Board’s PBE Standards are applicable for all public benefit entities (PBEs) with general purpose financial reporting requirements. That includes all public sector PBEs and NFP PBEs. 

A PBE is defined as a reporting entity whose primary objective is to provide goods or services for community or social benefit and where any equity has been provided with a view to supporting that primary objective rather than for a financial return to equity holders.


Are there any further specific financial reporting requirements for organisations included within this scope?

No.


Do standards or guidance only apply to NFPs beyond certain thresholds?

Yes.

The accounting standards framework involves a tiered approach (See table below). A NFP PBE’s expenditure will determine which tier the entity is eligible to elect to report in accordance with.


Public Benefit Entities

Entities

Accounting Standards

Tier 1

Publicly accountable (as defined); or Large (ie expenses >$30m)

PBE Standards
(based on IPSASs)

Tier 2

Non-publicly accountable (as defined) and expenses between $2m and $30m

PBE Standards Reduced Disclosure Regime (PBE Standards RDR)

Tier 3

Non-publicly accountable (as defined) with expenses ≤$2m

PBE Simple Format Reporting Standard – Accrual

Tier 4

Entities allowed by law to use cash accounting

PBE Simple Format Reporting Standard – Cash

The thresholds for Tier 1, Tier 2 and Tier 3 are dependent on the entity’ total annual expenses. These thresholds are defined in External Reporting Board Standard A1 Application of the Accounting Standards Framework (XRB A1). This standard also defines "public accountability" for the purposes of determining which entities must report under Tier 1 reporting requirements.

The thresholds for Tier 4 are specified in legislation outside of the accounting standards framework.


Narrative reporting

Yes.

Large (ie Tier 1 and Tier 2) NFP PBEs 

PBE IPSAS 1 contains guidance on service performance reporting for Tier 1 and Tier 2 NFP PBEs. The standard does not require the presentation of a statement of service performance, however in the absence of being required by legislation to prepare a statement of service performance, an entity is strongly encouraged to include a statement of service performance in its financial statements where:

  • the entity receives significant revenue from non-exchange transactions intended to benefit third parties, or 
  • the entity has non-financial objectives of such importance that non-financial performance reporting is significant to users of the financial statements.

The New Zealand Accounting Standards Board is currently developing a proposed new standard for service performance reporting. This standard is expected to replace the existing guidance contained in PBE IPSAS 1 and require all Tier 1 and Tier 2 NFP PBEs to provide service performance information.


Small (i.e. Tier 3 and Tier 4) NFP PBEs

Tier 3 and Tier 4 NFP PBE Standards require the presentation of a statement of service performance.

The purpose of the statement of service performance is to provide mainly non-financial information to help users understand what the entity did during the financial year.


Cash accounting

Certain small NFPs (operating cashflows under $125,000 and permitted by law) are eligible to elect to report in accordance with Public Benefit Entity Simple Format Reporting Standard – Cash (Not-For-Profit) and apply cash accounting.

United Kingdom

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

Current UK GAAP applies to all public benefit entities (excluding public sector). This includes registered charities in Scotland, England and Wales, and Northern Ireland whose income, expenditure or assets exceed certain thresholds.

The Charities SORP interprets UK-Irish GAAP specifically for the charity sector.

Those charities which are not registered may be included in the scope of the Charities SORP under their own legal frameworks or regulators’ requirements.


Are there any further specific financial reporting requirements for organisations included within this scope?

Further financial reporting requirements for registered charities can come from legal and regulatory requirements. The requirements will depend on the organisation’s legal form and the jurisdictions and sectors which the charity operates in.

There is also other sector-specific SORPs which may apply to charities dependent on their activities, for example housing and education. The Charities SORP does not apply to those charities which are required to follow sector-specific SORPs.


Do standards or guidance only apply to NFPs beyond certain thresholds?

Yes.

The Charities SORP applies to those charities whose income, expenditure or assets fall exceed certain thresholds. The type and level of the thresholds differ between jurisdictions and on the charity’s legal form.

For example, where a charity is constituted as a company (known as a charitable company), then the Charities SORP will apply regardless of the charity’s size.

The thresholds are dependent on the charities income, expenditure and assets.


Non-financial/Narrative reporting

The Charities SORP covers narrative reporting by charities. The accounting standard that the framework reflects, FRS 102, does not specify any requirements for narrative reporting. Therefore the Charities SORP contains additional requirements covering narrative reporting for charities. The framework sets out the content of the ‘Trustees’ Annual Report’, which is a narrative report which accompanies the accounts (financial statements).


Cash accounting

No.

The Charities SORP applies only to those charities who prepare accounts on an accruals basis. Charities whose income, expenditure or assets fall below certain thresholds may prepare cash-based receipts and payments accounts, except where they are constituted as a company. All charitable companies are required to prepare accounts on an accruals basis regardless of size.

The reporting requirements for cash accounts are determined by regulatory requirements and legislation specific to the charities jurisdiction. The accounting recommendations of the SORP do not apply. The following guidance has been produced by the three separate charity regulators corresponding to the four UK jurisdictions:

USA

What do the standards cover and to whom do they apply?

Which organisations are included within the scope of the reporting standards or guidance for NFPs?

The following types of NFP organisations, among others, are within the scope of reporting standards for NFPs: cemetery organisations, civic and community organisations, colleges and universities, elementary and secondary schools, federated fundraising organisations, fraternal organisations, health care entities, labor unions, libraries, museums, other cultural organisations, performing arts organisations, political parties, political action committees, private and community foundations, professional associations, public broadcasting stations, religious organisations, research and scientific organisations, social and country clubs, trade associations, voluntary health and welfare entities, and zoological and botanical societies.


Are there any further specific financial reporting requirements for organisations included within this scope?

If an NFP receives funding from governmental or other organisations, the resource provider may impose additional reporting requirements. In addition to the guidance described in 2.2.2, the American Institute of Certified Public Accountants (AICPA) also publishes an Audit & Accounting Guide on the US federal government’s Uniform Guidance for federal grants.


Do standards or guidance only apply to NFPs beyond certain thresholds?

Generally, US GAAP applies equally to all NFPs that choose, or are otherwise required by certain financial statement users, to report under it. Many smaller NFPs report on a cash basis or modified accrual basis of accounting. Within the FASB’s standards, there are a limited number of areas, most notably in the new standard on Revenue Recognition in Contracts with Customers (Topic 606), where there are reduced disclosure requirements for NFPs that are not obligors for publicly traded debt that has been they have issued directly or issued on their behalf by a governmental entity (conduit debt).

Some states may require GAAP financial statements and/or audits, and various thresholds exist among the different states.


Narrative reporting

The FASB’s standards do not include such guidance, while the GASB’s standards do require, and contain guidance on, the presentation of an accompanying Management’s Discussion and Analysis (MD&A). The Form 990, required by the Internal Revenue Service (IRS), includes a section for the narrative reporting on an organisation’s programs and accomplishments.


Cash accounting

NFPs that are not required by the regulatory or other users of their financial statements to report under US GAAP (see 4.2.2) may follow a special purpose framework of accounting, which entail preparing and reporting on financial statements using a comprehensive basis other than US GAAP, such as the cash basis.