Gaps in "GAAP": issues in nonprofit accounting and reporting in India

Abstract

Nonprofit Organizations (NPOs) in India play an important role as change agents for social and economic development. Though they command substantial amounts of resources, their financial performance measurement and reporting is a major concern. In absence of a single regulatory authority and specific accounting standards for NPOs,the practices of accounting and reporting vary across organisations. Based on an exploratory study, this paper documents the current status on requirements of accounting and reporting vis-à-vis the current practices of NPOs, identifies the gaps, and proposes an action plan to bridge the gaps. The paper classifies the gaps in accounting and reporting under conceptual and institutional frameworks. In order to bridge the gaps in the conceptual framework, the paper recommends the need for developing a uniform accounting and reporting system for all NPOs that should start with conceptualizing information needs of the stakeholders and end with conceptualizing appropriate financial statements to meet these needs and, in the process, resolve any ambiguity in the accounting treatment of specific transactions. At an institutional level, the paper suggests consultative processes among various stakeholders to develop the proposed system and recommends a need for amendments in various Acts to implement it.