The Financial Reporting Council has said it will meet with the leadership of churches, mosques and other Not-for-Profit organisations over the new statement of accounting standard introduced for them.
The Executive Secretary/ Chief Executive Officer, FRC, Mr. Jim Obazee, disclosed at a retreat organised by the council that the technicalities of the financial reporting requirements would be exposed to the leadership of the organisations and their financial reporting managers.
The FRC, in order to ensure accountability and probity in churches, mosques and other not-for-profit organisations, recently unveiled the Statement of Accounting Standards 32 for the not-for-profit organisations.
Obazee said, “The FRC, Federal Inland Revenue Service and the Corporate Affairs Commission shall meet with the leadership of Not-for-Profit organisations to agree on the latitude; that is, dictate what the entities must or must not do (duty), what they may do without interference from others (privilege), what they can do with the aid of the collective power (right) and what they cannot expect the collective power to do in their behalf (restrictions).”
According to Obazee, it has also been noticed that a number of entities operating on commercial lines, within charity, are claiming tax exemption on their income on the ground that the totality of the outfits are charitable institutions.
He said, “The income of all not-for-profit organisations registered under the Financial Reporting Council of Nigeria Act is exempt from income tax. However, business subsidiaries that are set up by charities are usually treated in the same manner as any other company. The income of these business subsidiaries is subject to income tax and should be rightly so reported, accounted and disclosed. This is the practice in the United Kingdom, Singapore and other developed economies.
“Currently, financial statements presented by not-for-profit organisations in Nigeria are not uniform and comparable. They differ from one type of institution to another and sometimes among institutions of a particular type, thus, making comparison and accountability difficult. It has also been noticed that a number of entities operating on commercial lines, within charity, are claiming exemption on their income on the ground that the totality of the outfits are charitable institutions.”
The FRC boss pointed out that an activity would be considered business or trading subsidiary if it was undertaken with a profit motive.
The FRC had earlier said that Not-For-Profit organisations that failed to comply would be sanctioned appropriately.
He said there were penalties from the FRC, CAC and FIRS for any church, mosque or not-for-profit organisation.
According to the FRC boss, not-for-profit organisations refer to entities normally without transferable ownership interests. They are organised and operate exclusively for social, educational, professional, religious, health, charitable or other not-for-profit purposes.
The SAS 32,among others, stipulates that financial statements for not-for-profit organisations shall include- statement of accounting policies; statement of financial position; statement of activities (income and expenditure); statement of changes in net assets; statement of cash flows; notes on accounts and five-year financial summary.
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