24 Aug. 2015
Financial information not enough for not-for-profit entities - closing the service performance gap
Not-for-profit (NFP) entities have been on notice for some time that financial reporting alone is not enough for donors/grantors/taxpayers. Numerous studies have shown non-financial information about a NFP entity’s delivery of goods and/or services is essential for users to assess how well their contribution is being utilised. The AASB's service performance reporting proposals will help close the gap between user needs and current financial reporting requirements.
The proposals would require NFP entities to provide information on key:
- service performance objectives – what the entity does to fulfil its purpose; and
- performance indicators - how the entity measures its achievement of those service performance objectives.
The AASB Chair, Ms Peach said, “For a long time, Australian Accounting Standards have been criticised for not sufficiently targeting the needs of NFP entity reporting users. Now the AASB has stepped up and issued proposals to directly address these criticisms”.
Some entities are already required to or are voluntarily providing service performance reporting. The AASB does not expect its proposals to substantially change such reporting.
Ms Peach commented, "The proposals provide significant flexibility in where and how service performance information can be reported. The AASB has been careful to ensure that it is not mandatory for the information to be audited or reviewed. However, other regulators may determine an audit or review is necessary.
Ms Peach added, “In the first instance, the proposals are aimed at NFP entities in both the private and public sectors, but the AASB thinks that users of for-profit entity reporting would also benefit from those entities reporting non-financial information about their objectives and their achievement of those objectives. So, we are particularly interested to hear constituents’ views on whether the proposals could be rolled out to the for-profit sector”.
The proposals are contained in Exposure Draft (ED) 270 Reporting Service Performance Information. The AASB requests comments by 12 February 2016.
The AASB will conduct an extensive outreach program to engage with, and obtain feedback from constituents on the proposals in ED 270. The outreach program will include education sessions, roundtables and webinars. Details, including how to register for these events will be available on the AASB’s website events page shortly and the AASB’s LinkedIn page.
Technical & Media Enquiries:
standard@aasb.gov.au
(03) 9617 7600