The Australian Accounting Standards Board (AASB) sought feedback on income recognition for not-for-profits (NFPs) through its post-implementation review (PIR) paper issued in November 2022.
The income recognition accounting standards for NFPs have been in place for just over three years, and the AASB through its PIR was seeking feedback on the overall effectiveness and efficiency of the requirements.
In our response, we indicated that the accounting standards AASB 15 and AASB 1058 as applicable to NFP entities over the last few years has been confusing for NFP preparers and practitioners, is open to significant judgement and as a result comparability is lacking between NFP entities.
However, even with inconsistent outcomes we indicated that in our view the NFP sector have no desire to see substantial changes made to these standards that would make it more difficult to apply and require more guidance and more examples.
With the guidance and examples already available in a AASB FAQ document, we recommended that these examples are included in the relevant standard rather than being separate to the standards as they are difficult to locate on the website.
Further, we recommended that once the international standard for NFPs is developed in 2025, called IFR4NPO, the AASB explores the appropriateness of its adoption in full or in part in Australia for all NFP entities.
It may possibly propose a more specific NFP requirement for income recognition which may be more suitable for the sector and address the lack of comparability issue highlighted above.
You can read our submission below.
You can find out more about our advocacy work on the website here.