A new international accounting standard for nonprofit organizations has emerged, drawing on the work of established standard-setters.
Humentum, a global nonprofit, and the Chartered Institute of Public Finance and Accountancy introduced the International Non-Profit Accounting Standard on Monday after working to develop it for six years. The two groups are founding members of the newly created International Non-Profit Reporting Foundation, which is publishing the standard. INPRF is a nonprofit, public interest organization, established to develop and promote globally accepted financial reporting standards specifically for nonprofits.
The new standard draws on established international frameworks, including the IFRS for SMEs Accounting Standard, and relevant aspects of the International Public Sector Accounting Standards. The International Financial Reporting Standards Foundation and the International Federation of Accountants licensed their standards for use by the groups, with 358 organizations from 86 countries providing their input
The INPAS offers a standalone, accrual-based framework that reflects the unique funding models and requirements of nonprofits, including guidance on narrative reporting, grant income recognition, and presenting information about restricted and unrestricted funds. It includes a practice guide for harmonized grant reporting. The new standard aims to improve "consistency, comparability and credibility" in nonprofit financial reporting, and is available for free at
"The nonprofit sector effectively manages billions of dollars annually," said Humentum co-CEO Chris Proulx in a statement. "This standard is a game-changer — its adoption will ease the burden of multiple grant reports and audits, streamline due diligence, and will give funders even greater confidence in financial information. It paves the way for fairer funding, more effective partnerships, and a stronger, more resilient sector."
Over 90% of countries do not have standardized financial reporting for nonprofits. The next step for the INPAS is adoption by country governments and voluntarily by nonprofits and donors seeking a harmonized approach to nonprofit reporting.
"For the first time, nonprofits have an accounting standard built entirely around their operational realities," said CIPFA chief executive Owen Mapley in a statement. "INPAS will help organizations demonstrate stewardship of resources, meet donor and public expectations, and strengthen trust through transparent, comparable reporting."
The INPAS is mainly designed for small and midsized nonprofits that need to prepare accrual-based financial reports because they have complex transactions to track, assets and liabilities, as well as cash balances to satisfy the needs and expectations of stakeholders. It isn't intended for the smallest nonprofits such as micro-entities, or for the very largest nonprofits. It can, however, be useful for larger nonprofits that have public accountability as defined in IFRS accounting standards because the INPAS has relevant sector-specific guidance and for smaller nonprofits that are exploring the adoption of accrual accounting as part of their organizational growth strategy.
"INPAS was only a gleam in the eye back in 2014 when 72% of respondents to an international survey from 179 countries agreed that it would be useful," said INPRF chief executive Ian Carruthers in a statement. "Its development over the last six years through the IFR4NPO project has been a fantastic example of global co-creation for the sector, by the sector. As the new CEO of INPRF — which has been specifically created to provide its long-term home — I am delighted that we are finally able to publish this long-awaited, ground-breaking guidance."
Some countries already have their own accounting standards for nonprofits. In the U.S., for example, the Financial Accounting Standards Board established a Not-for-Profit Advisory Committee in 2009.
