Financial Reporting In The Charities Sector

The ASB has issued an exposure draft of the proposed public benefit entity accounting standard.

The UK Accounting Standards Board (the ASB) has a current project called "The future of UK GAAP" with the long-term goal of converging UK Generally Accepted Accounting Practice (UK GAAP) with International Financial Reporting Standards (IFRS). The initial ASB proposal was for a three-tier approach.

Tier 1

Full IFRS should apply for publicly accountable entities. It is proposed that publicly accountable entities should include those with listed debt or equity instruments, or entities that hold assets on behalf of a large group of outsiders (e.g. banks, insurance companies). There will be a small number of charities that fall within this tier. The Companies Act will have to be amended to allow charities to apply IFRS as this is currently not permitted under UK law.