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It works in conjunction with the IFRS for small businesses (SMEs) which has been introduced to create consistency in the information provided to stakeholders of small and medium-sized businesses around the world. Not-for-profit entities that use this standard often do not have separate national guidance or a legal framework that deals with this sector’s particular accounting issues.
Richard Martin, ACCA’s head of corporate reporting, said: 'Although the IFRS for SMEs is designed for profit-oriented companies, this guide shows how it can be best used for the not-for-profit sector. We see a need and have tried to fill this gap on an interim basis, but we would welcome and support the development of an IFRS specific to this sector, in due course, which would address more thoroughly the needs of these entities, developed using a more robust due process.'
Richard Martin added: 'This guide will not just be of benefit to not-for-profits, but also the donors and other stakeholders interested in better financial reporting by them. The stakeholders can get a better understanding of what they’re looking at from the accounts and annual reports that they will see of where the money is going and how successful the entities have been in achieving their objectives.'