Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: form 3cd :: TDS :: Central Excise rule to resale the machines to a new company :: cpt :: list of goods taxed at 4% :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: due date for vat payment :: empanelment :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
News Headlines »
 Filing of online return for 4th quarter of 2016-17 — extension of period thereof
 CBDT simplifies ITR filing process from FY18
 Govt extends service tax return filing date to April 30
 No move to tax farm income, clarifies Arun Jaitley
 New board for indirect taxes to become operational from June 1
  9 changes that came into effect from April 1
 First time filing income tax? Here's all you need to know about Form 16 and Form 26AS
 New Opening Financial Controller Chartered Accountant (Manufacturing Plant) A Leading Company
 Income Tax Filing 2017: All you want to know about the single page ITR form SAHAJ
 How to benefit from investments in tax saving mutual funds
 60 per cent of income tax notices on fishy cash deposits returned

Do accounting standards apply to NPOs?
May, 10th 2007

It is not unusual to find fixed assets recorded at a nominal amount of Re 1 in the balance-sheets of NPOs (not-for-profit organisations). The assets may have been received free of cost as donation or grant. From an accounting angle, there is no harm with such low nominal values, but it is necessary for the auditor to be extra careful with regard to these assets, because "there is a greater possibility of their misappropriation," cautions the Research Committee of the Institute of Chartered Accountants of India (www.icai.org) in a recent publication titled Technical Guide on Accounting and Auditing in Not-for-Profit Organisations (NPOs)/Non-Governmental Organisations (NGOs).

The Institute advises auditors to review the assumptions and procedures in the computation of fair value of the assets. "The auditor should also verify quantitative details from the reconciliation statement between the assets existing at the beginning of the period and at the end of the period."

A major problem in the accounting for fixed assets can arise when the NPOs switch over to accrual basis. "Many assets, e.g. those received by way of donations or endowments may not have been recorded at the time they were acquired. It would be necessary to identify such assets and account for them appropriately," taking into consideration factors such as `adverse possession, defects in title, etc.'

Tracing the history of NPOs in India, the book informs that soon after Independence many followers of Gandhiji established voluntary agencies to work closely with the governmental programmes on social and economic issues. "The second stage of growth of NPOs in India was around the year 1960 when many individuals noticed that the governmental programmes appeared to be inadequate to deal with the deprived sections."

The `Technical Guide' recommends `a standardised framework for the preparation and presentation of financial statements of NPOs'. Accounting Standards issued by the ICAI do not apply to an NPO `if no part of the activity of such entity is commercial, industrial, or business in nature'. As a corollary, therefore, the Standards will apply even if a very small proportion of activities is considered to be commercial, as for example, `where an NPO is engaged in the commercial activity of granting loans/credit to small entrepreneurs at nominal rates of interest.'

How to apply AS-2 (on inventories) in an NPO that manufactures or purchases items for distributing free of cost to beneficiaries? Since these items are not held for the purpose of sale or in the process of production for such sale, we need not consider the same to be inventories within the meaning of AS-2; value them at lower of cost or replacement cost, if available, advises the ICAI.

During these days of rupee appreciation, NPOs that benefit from dollar inflows may be a worried lot. Be that as it may, it helps to remember that AS-11 requires forex transactions to be accounted for at the exchange rate prevalent on the date of the transaction. "Exchange differences related to amounts receivable arising on account of change in exchange rates should be recognised in the income and expenditure account."

A book to profit from!

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions