ACCA (Association of Chartered Certified Accountants) has welcomed the publication of a draft new accounting standard for charities. How to account for volunteer labour, how to account for buildings and property in a charity and how to deal with gifts and grants have all been set out in the new standard; guidance that was not available heretofore and for which a myriad of different accounting practices had developed. The new standard will bring certainty and transparency to the sector.

Aidan Clifford, ACCA’s Advisory Services Manager, said “Accounting standards have in the past only measured charities by how much cash they raised and how much they spend on their various activities. Volunteer labour and donated goods and services were ignored for accounting purposes. Requiring the inclusion of the true cost of volunteer labour and donations of goods and services will provide a better indication of the actual work being done by a charity.”

The draft accounting standard addresses inconsistent interpretations arising in application of normal accounting standards in charities because they have different objectives, funding and ownership from normal businesses.

The new standard is somewhat ungainly called Financial Reporting Standard For Public Benefit Entities. Public Benefit Entities are loosely referred to in Ireland as charities or not-for-profit entities.

Charities in Ireland last had their basic accounting and disclosure requirements set out in the Companies Act 1963 and changes to accounting rules since then have been designed for companies trying to make a profit, not charities. The Financial Reporting Standard For Public Benefit Entities will bring the accounting requirements up to date and bring consistency and better transparency to the sector.

Mr Clifford added “Normal accounting rules do not deal well with the transactions that happen in a charity. The new standard deals with matters such as loans and donations, property held for the provision of social benefits and impairment of property values. The new rules should be welcomed by the sector.”

Further information:

Aidan Clifford,
Advisory Services Manager,
ACCA Ireland,
9 Leeson Park,
Dublin 6.

T: 01 4988900

E: info@ie.accaglobal.com