The Chartered Institute of Public Finance and Accountancy (CIPFA) and Humentum have published the third exposure draft of the world’s first-ever International Non-Profit Accounting Guidance (INPAG) for Non-Profit Organisations (NPO). 

This is the third and final Exposure Draft which aims to address issues such as fund accounting, classification of expenses (including support costs and fundraising costs) and donor reporting formats (referred to as ‘Supplementary statements’). 

At present, there is no international accounting guidance for non-profit organisations. INPAG addresses the crucial need for standardised financial reporting within the non-profit sector, an area that currently lacks specification. It also aims to improve clarity and consistency of NPO financial reports, resulting in greater credibility and trust in the not-for-profit sector globally. 

The publication follows the first and second Exposure Drafts released in November 2022 and September 2023 respectively. Exposure Draft 1 focused on the overarching framework for NPO financial reporting. This included a description of NPOs and the reporting entity, the concepts and pervasive principles that underpin financial reporting. While Exposure Draft 2 focused on some of the key accounting transactions that are relevant for NPO financial reporting.   

Commenting on this, CIPFA CEO, Rob Whiteman, said: “The accountancy profession plays a critical role in building trust and inspiring action within the non-profit sector. That’s why CIPFA is delighted to be working jointly with Humentum to pioneer the first ever international financial reporting guidance for NPOs. The third exposure draft addresses the most pervasive issues encountered by NPOs globally. I urge organisations to submit their comments, ensuring we produce the most effective guidance possible.”

Humentum CEO, Christine Sow, concluded: “This final Exposure Draft marks a giant leap forward in improving the quality and reliability of annual audited accounts, while reducing the reporting burden on NPOs.

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“Additionally, the proposals for fund accounting and support costs provide transparency at a holistic whole-of-entity level, removing the barriers to flexible funding and full cost recovery that have been holding the sector back for decades. We now call on grant makers to seize the opportunity of a generation by actively engaging in this consultation and the finalisation of INPAG, to ensure that the funding ecosystem works for everybody.”