Our first two webinars on accounting and reporting matters in 2021, hosted by Kim Heng, focus on issues facing private sector not-for-profit entities and are presented in a two-part series.
Not-for-profit organisations have experienced increased levels of change and scrutiny from both a financial reporting and operational perspective over recent years. Our agendas for each of these webinars cover a mix of both current reporting and operational topics that we believe are of interest.
The application of the specific income recognition standard for not-for-profit entities, AASB 1058 Income of Not-for-profit Entities, has raised challenges in several areas. During Part 1 held on 16 March, we shared the practical complexities of assessing the enforceability of arrangements and whether sufficiently specific performance obligations exist. We also described practical examples of when to consider recognising a financial liability, including the resulting impact on income recognition, on receiving a grant or donation.
Our team also discussed important considerations for achieving financial reporting transparency more broadly, and areas where not-for-profit regulators are focusing their compliance activities. Our tax colleagues talked about trends in the charities sector, the ‘in Australia’ test and ACNC compliance relating to charity governance and Deductible Gift Recipient status.
Part 2 of this series focused on financial reporting issues. It highlighted considerations relating to termination for convenience clauses in grant agreements, impairment testing of non-financial assets, going concern and payroll remediation activities.
Our team also discussed how modern slavery laws and payment times reporting may impact operations, and looked ahead and provided an overview of upcoming standards and projects being considered by the Australian Accounting Standards Board, and its engagement with other relevant regulators and stakeholders to finalise the private sector not-for-profit financial reporting framework.
Following our webinar, the Australian Accounting Standards Board decided at its April 2021 meeting not to progress its revision of the definition of a not-for-profit entity. The existing definition will therefore continue to be in effect.