Regulatory updates

Currently, there are no common international accounting standards for Non-Profit Organisations (NPOs). The International Financial Reporting for Non-Profit Organisations (IFR4NPO) project aims to address this issue by strengthening NPO governance and financial management through the development of internationally applicable financial reporting guidance for NPOs.

Consequently, first Exposure Draft (ED) of the International Non-Profit Accounting Guidance (INPAG) was issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and Humentum in November 2022. The INPAG ED1 was focused on the overarching framework for NPO financial reporting. In this regard, recently, the ED of INPAG Part-2 has been issued. It covers some of the key accounting transactions that are relevant for NPO financial reporting, which include:

• Expenses on grants and donations
• Revenue
• Inventories, and
• Foreign currency translation.

With a view to invite comments from the members, ICAI has hosted the INPAG ED2 on its website. It is open for comments up to 10 January 2024.

To access the text of INPAG ED2, please click here

Currently, Accounting Standards (AS) issued by the ICAI for applicability of AS to non-company entities are applicable to Limited Liability Partnerships (LLPs) for the preparation and presentation of their financial statements.

Section 34A of the LLP Act, 2008 prescribes that the Central Government may, in consultation with the National Financial Reporting Authority (NFRA), prescribe the standards of accounting as recommended by the ICAI for a class or classes of LLPs. Recently, ICAI issued the Exposure Draft (ED) on AS for LLPs.

The ED is open for comments up to 27 November 2023.

To access the text of the ED, please click here

In August 2023, the International Accounting Standards Board (IASB) issued Lack of Exchangeability, which amended IAS 21, the Effects of Changes in Foreign Exchange Rates .

Accordingly, recently, the Institute of Chartered Accountants of India (ICAI) issued the Exposure Draft (ED) on Lack of exchangeability-Amendments to Ind AS 21, The Effects of Changes in Foreign Exchange Rates.

The comment period ended on 1 December 2023.

To access the text of the ED, please click here

ICAI had submitted recommendations to the National Financial Reporting Authority (NFRA) regarding 35 Standards on Auditing (SAs) for audit of companies. ICAI is of the view that these standards should apply mutatis mutandis to audit of LLPs as well.

In this regard, on 22 November 2023, ICAI issued the ED of SAs for LLPs. The comment period is open till 6 January 2024.

To access the text of the ED, please click here

Charitable trusts and institutions have been subject to reporting requirements that have transformed over the years. In October 2023, ICAI had issued a technical guide on reports of audit under Section 12A/10(23C) of the Income Tax Act, 1961 (the technical guide). Recently, ICAI issued an exposure draft on ‘Guidance Note on Reports on Audit under Section 12A/10(23C) of the Income-tax Act,1961’ taking the technical guide as base.

The draft guidance note aims to:

• Better equip the practitioners in engaging with charitable institutions while conducting audit under section 12A and 10(23C) of the Income Tax Act, 1961 and
• Provide guidance to those in charge of governance of charitable institutions for discharging their respective responsibilities towards audit of accounts

The comment period ends on 29 May 2024.

To access the text of the exposure draft, please click here