It is feared the proposed removal of special purpose financial statements (SPFS) by the Australian Accounting Standards Board (AASB) will cause a “massive burden” for smaller charities.
The AASB said in a recent paper they had to review SPFS because of “consistency, comparability and transparency” issues within financial reports, which did not meet international standards.
Instead of SPFS, which organisations design themselves and only need to comply with six accounting standards, a general purpose financial statement (GPFS) must comply with all accounting standards.
Justice Connect COO, Sophie Gordon-Clark, told Pro Bono News the changes may cause problems, in particular for small charities with a low overhead.
“A big issue is the capacity for small not for profits to be able to do that especially when they’re reporting on a cash basis and they haven’t even gone down the path of accruing accounting,” Gordon-Clark said.
She said smaller charities didn’t often have the resources to deal with large audits such as this.
“It puts a massive burden on the people who are running NFPs, especially volunteer-run organisations which may not have the knowledge and the resources to comply,” she said.
To view the full ProBono article, click here.