One of the most significant issues for NPO reporting, and hence for donor oversight of grants, is the manner in which accounts are kept. For any donor to properly assess an NPO’s fiscal probity, the accounts must allow for appropriate oversight and comparison. Few countries have adequately addressed the accounting rules applicable to NPOs in the past, so the promulgation of NPO standards by Swiss GAAP FER is quite significant. (Swiss GAAP FER is the independent Swiss agency with oversight of all accounting standards in Switzerland.)
The new standards, set out in FER 21, deal with the fact that NPOs do not have the financial constraint of profit motivation by requiring books of account to assess not only profit and loss but also cash and capital flows during an accounting period. The standards require fund accounting and balance sheet tabulations, as well as a consideration of the ways in which revenues and assets are used in pursuance of goals. In addition, the rules have two exemptions for small NPOs, which permit cash accounting and do not require cash flows to be reported. For large NPOs accrual accounting is required, as is the reporting of cash flows.
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