The Securities and Exchange Commission (SECP) has approved the adoption of accounting standards issued by ICAP for non-profit organisations formed under Sections 42 and 43 of the Companies Ordinance, 1984. The adoption of the standard shall promote transparency, accountability and efficiency in the organisation providing volunteer services to the community in the country as well as to have the best practices followed by the developed jurisdictions. The standard is applicable to the financial periods beginning on or after July 1, 2016, in addition to already notified financial reporting framework.
The adoption of standard by the SECP shall enhance the credibility of information by giving additional useful disclosures related to contribution, inventory, pledges, tangible, intangible assets, strategic investments, deferred revenue and allocation of expenses. Moreover, the companies have option to present statement of financial position and statement of income and expenditure by using fund accounting.
This shall help the users of such statements to make informed decisions based on elaborated information and to reinforce the efforts made by such organisations for the community welfare. Additionally, it shall also help and improve the understanding of critical information required for surveillance and monitoring by the regulatory authorities of functions performed by such organisations to avoid their misuse.-PR