Charities urged to comment on proposed amendments
Charities urged to comment on proposed donated goods amendments
BDO is urging charities and their advisers to make submissions on proposed amendments to the new not-for-profit accounting standards, or face the high costs of recording the value of donated goods in financial reports.
Charities are in the process of moving to a new suite of accounting standards. As a result of this move, charities with expenditure in excess of $2 million per annum will be required to record donated goods at fair value on the date they are received.
“This requirement will be challenging and costly for charities, such as opportunity shops, that receive high-volumes of low-value donated goods, but meeting the requirements will have no practical benefits for the charities involved,” says BDO Head of Not for Profit Bernard Lamusse.
“Furthermore, to be fully compliant, these charities will also have to quantify stock on hand at year-end, adding considerable cost and inconvenience to the charity.”
In response to the concerns of charities that will be impacted by this requirement, the New Zealand Accounting Standards Board (NZASB) has released an Exposure Draft for public comment, proposing amendments that, in certain circumstances, would allow charities not to recognise donated goods at the date of acquisition.
The NZASB is seeking comments on the Exposure Draft by 30 October 2015.
“BDO will be making a submission in support of the NZASB’s decision to reduce compliance costs for charities in relation to this requirement,” says Mr Lamusse.
“It’s very important that the NZASB also hears from not-for-profit entities that would benefit from the removal of this requirement. We encourage such entities to make submissions and will readily provide guidance if required.”
Information on the Exposure Draft is available here