Applicable accounting standards

Guide to Financial Management

Applicable accounting standards

Which accounting standards apply to NGOs in the developing world?

In fact there are no global accounting standards that apply to all NGOs. Humentum is partnering with the Chartered Institute of Public Finance and Accountancy to develop internationally applicable Guidance for non-profit financial statements.

Visit the separate project website: www.ifr4npo.org

Until the IFR4NPO Guidance is issued in 2025, what can NGOs apply?

  • IFRS
    International financial reporting standards (IFRS) are designed for general purpose financial statements for profit-making entities, but are often applied to NGOs. The  IFRS for SMEs (Small and medium-sized entities) is much shorter and easier to digest.
  • IPSAS
    International public sector accounting standards are applicable to governments.  They consider fund accounting, non-reciprocal transactions and assets that are not used to generate profit.
  • ACCA Companion Guide to IFRS for SMEs for non profits. This has a forward from the International Accounting Standards Board.  It is based on the UK Charities SORP (Statement of Recommended Practice), which is itself an interpretation of IFRS for SME.

Until such time as a global applicable standard is developed, IFRS for SME (or your own country's accounting standards if they exist) is probably the most useful framework to give a true and fair view, although adjustments may be needed to consider cash or modified cash accounting, non-capitalisation of assets, tracking of restricted and unrestricted funds, basis of recognition of grant income and narrative reporting.