Cambodian Financial Reporting Standard Accrual for Not-for Profit Entities

(CFRSA for NFPEs)

This Standard was issued by National Accounting Council
Cambodian Financial Reporting Standard Accrual for Not-for Profit Entities (CFRS
for NFPEs)
CONTENTS

Paragraph
Objective ............................................................................................................................................. 1
Scope .................................................................................................................................................. 1
Standard ............................................................................................................................................... 1-2
Appendix A: Specific Requirements ................................................................................................... A1–A214
Section 1: Introduction ........................................................................................................................ A1–A3
Section 2: Objective of Reporting and Overview of Reporting Requirements .................................... A4–A36
Users and Their Needs ................................................................................................................ A4–A5
Objective of Reporting ................................................................................................................ A6–A7
Required Components of the Financial Report........................................................................... A8–A9
Optional Component of the Financial Report…………………………………………………. A10
Presentation of the Entity’s Performance .................................................................................... A11–A14
General Information .................................................................................................................... A15–A17
Comparative Information ............................................................................................................ A18–A19
Consistency of Presentation ........................................................................................................ A20–A24
No Offsetting of Amounts........................................................................................................... A25–A26
Significant Items ......................................................................................................................... A27–A28
Correction of Errors .................................................................................................................... A29
Changes in Accounting Estimates ............................................................................................... A30–A33
Events After the Reporting date .................................................................................................... A34–A36
Section 3: Entity Information .............................................................................................................. A37–A39
Purpose and Value to Users ........................................................................................................ A37
Required Information .................................................................................................................. A38–A39
Section 4: Statement of Service Performance...................................................................................... A40–A45
Purpose and Value to Users ........................................................................................................ A40
Required Information .................................................................................................................. A41–A43
Optional Information................................................................................................................... A44–A45
Section 5: Statement of Financial Performance ................................................................................... A46–A87
Purpose and Value to Users ........................................................................................................ A46
Format of Statement of Financial Performance........................................................................... A47–A50
Required Information.......................................................................................................... A47–A48
Optional Information .......................................................................................................... A49–A50
 Revenue ...................................................................................................................................... A51–A69
Required Information ......................................................................................................... A55–A59
Optional Information.......................................................................................................... A60–A62
Accounting for Revenue .................................................................................................... A63
Table 1: Recording of Specific Types of Revenue
Revenue With and Without Conditions ..................................................................... A64–A68
Goods and Services in Kind....................................................................................... A69
Expenses ..................................................................................................................................... A70–A81
Required Information ......................................................................................................... A73–A77
Optional Information.......................................................................................................... A78–A80
Accounting for Expenses ................................................................................................... A81
Table 2: Recording of Specific Types of Expenses
Other Information.......................................................................................................................... A82–A87
Required Information ......................................................................................................... A82
Optional Information.......................................................................................................... A83
Amounts Payable or Receivable on Behalf of Others ................................................................... A84–A87
Section 6: Statement of Financial Position ......................................................................................... A88–A150
Purpose and Value to Users ........................................................................................................ A88
Format of Statement of Financial Position ................................................................................. A89–A91
Required Information ......................................................................................................... A89–A91
Assets........................................................................................................................................ A92–A117
Required Information ......................................................................................................... A93–A103
Optional Information.......................................................................................................... A104–A107
Accounting for Assets ....................................................................................................... A108
Table 3: Recording of Specific Asset Types
Calculating Debtors ................................................................................................... A108
Heritage Assets .......................................................................................................... A110–A111
Donated Assets .......................................................................................................... A112–A113
Revaluation of Property, Plant and Equipment.......................................................... A114–A116
Assets Held on Behalf of Others................................................................................ A117
Liabilities .................................................................................................................................... A118–A137
Required Information ......................................................................................................... A119–A128
Optional Information.......................................................................................................... A129–A131
Accounting for Liabilities .................................................................................................. A132
Table 4: Recording of Specific Liability Types
Provisions .................................................................................................................. A133–A135
Possible Future Liabilities ......................................................................................... A136
Contingent Liabilities ................................................................................................ A137
 Accumulated Funds .................................................................................................................... A138–A148
Required Information ......................................................................................................... A139–A145
Accounting for Accumulated Funds .................................................................................. A146–A148
Other Information ....................................................................................................................... A149–A150
Required Information ......................................................................................................... A149
Optional Information.......................................................................................................... A150
Section 7: Statement of Cash Flows.................................................................................................... A151–A170
Purpose and Value to Users ........................................................................................................ A151–A152
Format of the Statement of Cash Flows...................................................................................... A153–A157
Required Information ......................................................................................................... A153–A157
Cash Flows from Operating Activities ....................................................................................... A158–A164
Required Information ......................................................................................................... A158–A161
Optional Information.......................................................................................................... A162–A164
Cash Flows from Investing and Financing Activities ................................................................. A165–A169
Required Information ......................................................................................................... A165–A169
Cash Balances............................................................................................................................. A170
Required Information ......................................................................................................... A170
Section 8: Statement of Accounting Policies ...................................................................................... A171–A185
Purpose and Value to Users ........................................................................................................ A171
Format of the Statement of Accounting Policies ........................................................................ A172
Required Information ......................................................................................................... A172
Accounting Policies Applied ...................................................................................................... A173–A180
Required Information ......................................................................................................... A174–A180
Basis of Preparation ................................................................................................... A175–A176
Goods and Services Tax (VAT) ................................................................................. A177
Specific Accounting Policies ..................................................................................... A178–A180
Changes in Accounting Policies ................................................................................................ A181–A182
Required Information ......................................................................................................... A183–A184
Accounting for Changes in Accounting Policies................................................................ A185
Section 9: Notes to the Financial Report ....................................................................................... A186–A214
Purpose and Value to Users ........................................................................................................ A186
Required Information ................................................................................................................. A187–A213
Significant Grants and Donations with Conditions which have not been Recorded as a A188
Liability ........................................................................................................................
Goods or Services in Kind Provided to the Entity ............................................................. A189
Property, Plant and Equipment........................................................................................... A190–A191

Significant Donated Assets not Recorded .......................................................................... A192

Significant Heritage Assets not Recorded.......................................................................... A193
 Assets Used as Security for Liabilities............................................................................... A194
Assets Held on Behalf of Others ........................................................................................ A195
Changes in Accumulated Funds ......................................................................................... A196
Commitments ..................................................................................................................... A197–A198
Contingent Liabilities......................................................................................................... A199–A201
Related Party Transactions................................................................................................. A202–A208
Explanation ................................................................................................................ A202–A205
Requirements ............................................................................................................. A206–A208
Events After the Reporting date ......................................................................................... A209–A210
Ability to Continue Operating............................................................................................ A211–A212
Correction of Errors ........................................................................................................... A213
Additional Information....................................................................................................... A214
Optional Information .................................................................................................................. A215
Section 10: Glossary
Appendix B: Transitional Arrangements ............................................................................................ B1–B8
Objective..................................................................................................................................... B1
Transitional Groups .................................................................................................................... B2
General Provisions..................................................................................................................... B3-B8
Group 1: New Entities........................................................................................................ B7
Group 2: Continuing Entitis……....................................................................................... B8
Basis for Conclusions

(CFRS FOR NFPEs) Cambodian Financial Reporting Standard Accrual for Not-for Profit Entities (CFRS for
NFPEs) is set out in paragraphs 110 and Appendices A and B. All the paragraphs in the Standard and
Appendices have equal authority. (CFRS FOR NFPEs) should be read in the context of its objective, the
Basis for Conclusions and Standard Application of the Accounting Standards Framework.
Objective
1. The objective of this Standard is to facilitate financial reporting by not-for-profit entities (NFP) which
shall apply Cambodian Financial Reporting Standard for Not-for-Profit entities (CFRS For NFPEs
Tier2), by improving the quality and consistency of the information disclosed in financial reports,
and to facilitate comparability between entities, and between years for the reporting entity.

Scope
2. This Standard applies to not-for-profit entities, which are register under Cambodian Laws.

Standard
3. Not-for-profit public benefit entities that are eligible for, and elect to apply, the Tier 2 Cambodian
Financial Reporting Standard for Not-for-Profit Entities shall prepare a Financial Report in accordance
with the requirements set out in Appendix A and the transitional provisions in Appendix B.

4. Accompanying this Standard is an explanatory guide containing an optional template and associated
guidance notes that illustrate the requirements of this Standard (Explanatory Guide A5 Optional
Template and Associated Guidance Notes for Applying Public Benefit Entity Simple Format Reporting
– Accrual (Not-For-Profit)). It is not mandatory to apply the template or guidance notes and they
have no legal status. However, when an entity applies the template in the specific circumstances of
the entity, the Financial Report will comply with this Standard.
5. Where this Standard does not provide guidance on a specific type of transaction or event, the entity shall
use its judgement to determine an appropriate method of accounting for that transaction type that results
in the Financial Report providing relevant and reliable information. The entity shall refer to, and
consider the applicability of, the following in descending order:
(a) The principles and requirements in this Standard dealing with similar and related transactions or
events; and
(b) The definitions and concepts in the CFRS for NFPEs Framework to the extent that they do not
conflict with this Standard. In making the judgement described above, the entity might also
consider (but is not required to apply) the relevant requirements in the Tier 2 CFRS for NFPEs
Accounting Requirements dealing with the same, similar or related transactions or events.

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Appendix A: Specific Requirements
This Appendix contains the requirements for Public Benefit Entity Simple Format Reporting - Accrual (Not-For-
Profit). It is an integral part of the Standard.

Section 1: Introduction
A1. This part of the Standard sets out the requirements for the preparation of financial report.
A2. This Standard comprises a number of sections (as shown in the Table of Contents). These refer to
specific aspects of reporting. Within each section information is presented in numbered paragraphs to
enable cross-referencing within this Standard.
A3. Terms are defined in the Glossary in section 10 to assist with the understanding of this Standard.

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Section 2: Objective of Reporting and Overview of Reporting Requirements
Users and Their Needs
A4. The Financial Report for a NFPE is designed for those users who cannot require the entity to
disclose the information needed for accountability and decision making. Most users fall into two groups:
(a) Providers of resources to the entity; and
(b) Recipients of services from the
entity. A5. Examples of these users are:
(a) Donors, who contribute to a shelter for the homeless which relies on grants and donations from
the community (resource providers); and
(b) Service recipients who benefit from the meals and short term accommodation provided at the
shelter.
Objective of Reporting
A6. An entity should prepare a Financial Report that addresses the following questions:
(a) “Who are we?” – an overview of the entity;
(b) “Why do we exist?” – why the entity was established and what it seeks to achieve (outcomes);
(c) “What did we do?” – what the entity did during the year in providing goods or services (outputs);
(d) “What did it cost?” – what it cost to provide the goods or services, and to run the entity;
(e) “How was it funded?” – the sources of revenue used to pay for its activities in providing goods or
services;
(f) “When did we do it?” – the period covered by the report, and a comparison of information with
previous reporting periods;
(g) “How did we do our accounting?” – the accounting policies applied; and
(h) “What do we need to continue operating?” – the ability of the entity to continue achieving its
objectives and operate in the foreseeable future. This question can be answered by looking at the
Financial Report as a whole.
A7. The Financial Report is usually prepared for a financial year (which ends on its “reporting date”). The
Financial Report shall identify and reflect the period to which it refers, and contain only the revenue,
expenses and cash flows for that period. It may be prepared for a part year, but this is unusual and occurs
only when the entity is formed or ceases to exist during a year, or changes its reporting date. If this is the
case, the entity will need to check that the revenue, expenses and cash flows are only for that part year,
for example, depreciation and rent.
Required Components of the Financial Report
A8. An entity shall prepare a Financial Report every financial year with, at a minimum, the following
components:
(a) Entity information which explains what the entity is and why it exists (section 3);

(b) A statement of financial performance showing what the entity has generated (revenue) and the
cost of running the entity (expenses), over the year, so that users and preparers know whether the
entity has made a surplus or a deficit for that financial year (section 5);
(c) A statement of financial position showing what the entity owns (assets), what the entity owes
(liabilities) and the difference (accumulated funds) at the reporting date (section 6);
(d) A statement of cash flows showing the cash the entity received, and the cash the entity paid out
during the year (section 7);

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 (e) A statement of accounting policies which explains the accounting rules used to prepare the
Financial Report (section 8); and
(f) Notes to the Financial Report explaining some of the amounts shown in the statements in (b)–(e)
above, as well as explaining relevant events affecting the financial year including commitments
and contingencies (section 9).
A9. An entity may change the titles of these statements if the entity considers that an alternative title is more
suitable for the entity and users of the Financial Report. For example, the statement of financial
position is sometimes referred to as the balance sheet, and the statement of financial performance is
sometimes referred to as the operating statement.

Optional Components of the Financial Report

A10. A statement of service performance which explains what the entity was seeking to achieve
(outcomes) and what it did (outputs) (section 4).

Presentation of the Entity’s Performance

A11. The Financial Report shall present fairly (or “provide a true and fair view” of) the entity’s service
performance, financial performance and cash flows over the financial year, and its position at
reporting date, in accordance with this Standard. Fair presentation is achieved by compliance with this
Standard, and also requires an entity to:
(a) Select and apply appropriate accounting policies (section 8);
(b) Present information in the best way to achieve the following goals:
(i) Relevance: the information can be used to assess the entity’s performance.
(ii) Reliability: the information represents what has happened in a way that most users would
see as a fair representation of the situation, with no bias.
(iii) Comparability: users are able to compare what the entity did this year with what the entity
did last year. Users might also want to see how the entity performed compared to similar
entities in the same sector this year.
(iv) Understandability: information is presented so that users can identify the main points of the
entity’s performance in that year and ask questions about that. Users should not have to be
a qualified accountant to do this.
A12. Where the requirements of this Standard have been followed but more information about particular events
during the year is needed in order to give users a full picture of what happened, additional relevant
information shall be provided.
A13. Timeliness of reporting is important. The Financial Report should be provided as soon as possible
following the end of the financial year so that the information is useful and relatively current.
A14. It is important that the Financial Report is internally consistent. This is done by cross-referencing each
line of a statement to any other information that relates to that line item in the rest of the Financial
Report. For example, the total for property, plant and equipment would be referenced to the note
containing the property, plant and equipment schedule. It is also important that any non-financial
information, for example, information included within the statement of service performance, is
consistent with financial information included elsewhere in the Financial Report.
General Information
A15. Each component in the Financial Report specified in paragraph A8 shall be clearly identified.
A16. An entity’s Financial Report shall incorporate all the activities of the entity. The Financial Report shall
include all branches or other operating units, if the entity is structured into more than one unit. This is
done by collating and reporting information from all the branches or operating units and excluding all
transactions between those units. Identifying the branches or other operating units within the entity is
relatively straight forward where the entity has legal form. For unincorporated entities, the entity will

5
 need to look at factors such as whether those branches or other operating units are acting as part of the
entity, for example, by using the entity’s registration number.
A17. The following information shall be displayed prominently, and repeated at the top of each page of the
Financial Report:
(a) The name of the entity that is preparing the Financial Report;
(b) The date of the end of the financial year covered by the Financial Report, or the period to which
the Financial Report applies, as appropriate; and
(c) The level of rounding used in the presentation of the Financial Report (as a general rule whole
Khmer Riels)
Comparative Information
A18. Although the Financial Report focuses on this year’s information, comparative information for the
previous year shall be included in the statement of service performance, statement of financial
performance, statement of financial position, statement of cash flows and any associated notes to the
Financial Report unless this Standard specifically allows otherwise. Comparative information shall also
be provided for the disclosures about related parties in the notes to the Financial Report. The
Financial Report may contain further comparative information where it is considered useful for users of
the report.
A19. An entity may, but is not required to, report budgets or plans as an additional column alongside its actual
results as further comparative information.
Consistency of Presentation
A20. An entity shall select and apply its accounting policies consistently for similar transactions and other
events, unless this Standard specifically requires or permits categorisation of items for which different
policies may be appropriate. If this Standard requires or permits such categorisation, an appropriate
accounting policy shall be selected and applied consistently to each category.
A21. An entity may prepare its Financial Report on either a VAT-inclusive or a VAT-exclusive basis,
provided that VAT is reported in a consistent way throughout the Financial Report.
A22. All amounts shall be presented in Cambodian Khmer Riels. If the entity has transactions or balances that
are not in Cambodian Khmer Riels, it shall translate amounts to Cambodian Khmer Riels as follows:
(a) Transactions are to be translated using the exchange rate on the date the revenue, expense or cash
flow occurs; and
(b) Monetary asset and liability balances are to be translated using the exchange rate at reporting date.
A23. An entity shall not change the way the information is presented, or the categories of disclosure, from one
period to the next unless:
(a) There has been a significant change in the entity’s operations; or
(b) This Standard requires that the presentation or a category of disclosure is changed.
A24. Any changes to presentation or categories of disclosure due to the application of paragraph A23 also
require similar changes to the comparative amounts, unless it is impracticable to do so.
No Offsetting of Amounts
A25. Users of the Financial Report should be given as much relevant information as possible about the
entity. Therefore, the entity shall report gross amounts for transactions, and not offset (net-off) any
associated transactions or balances. This means that:
(a) Assets and liabilities shall not be offset against each other; and
(b) Revenue and expenses shall not be offset against each other.
A26. Valuation adjustments such as write-downs of inventory or property, plant and equipment provide for the
change in value of an entity’s assets. Measuring assets net of valuation adjustments is not considered
offsetting. Accounting for the net amount of VAT owing to GDT is not considered offsetting.

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Significant Items
A27. Items are significant if their omission or misstatement could, individually or collectively, influence the
decisions or assessment of users relying on the Financial Report. Significance is considered in relation to
both the nature and size of the item, or a combination of both. For the purposes of this Standard,
significance has the same meaning as materiality.
A28. Significance applies to both financial and non-financial information.
Correction of Errors
A29. Significant errors shall be corrected as soon as practicable. Errors arising during the reporting period
shall be corrected before the Financial Report is finalised. Errors relating to past periods shall be
corrected in the current Financial Report before the report is finalised by adjusting the opening balance
of the relevant asset, liability or accumulated funds at the beginning of the financial year. No adjustments
to past periods are required (see paragraph A213).
Changes in Accounting Estimates
A30. Many items can only be estimated as a result of the uncertainties inherent in delivering services or
conducting other activities. The use of reasonable estimates is therefore an essential part of the
preparation of the Financial Report. For example, estimates may be required of:
(a) Revenue earned to date under a contract;
(b) Bad debts arising from uncollected receivables;
(c) Out-of-date inventory; and
(d) The useful lives of items or categories of property, plant and equipment.
A31. An estimate may need revision if changes occur in the circumstances on which the estimate was based or
as a result of new information or more experience. The revision of an estimate does not relate to prior
periods and is not the correction of an error.
A32. The effect of a change in an accounting estimate shall be recorded by including it in the statement of
financial performance as part of the relevant revenue or expense item in the current period.
A33. To the extent that a change in an accounting estimate gives rise to changes in assets and liabilities, or
accumulated funds, it shall be recorded by adjusting the amount of the related asset, liability, or
accumulated funds for the current period.
Events After the Reporting date
A34. Events after the reporting date are those events, both favourable and unfavourable, that occur between the
reporting date and the date when the Financial Report is finalised. The reporting date is the last day of
the financial year to which the statements relate. The date of finalisation is the date on which the
statements have received approval from the individual or body with the authority to authorise those
statements for issue.
A35. An entity shall adjust the amounts recorded in its Financial Report and update the related disclosures to
reflect events after the reporting date that provide evidence of conditions that existed at the reporting
date. The following are examples of events that require an entity to adjust the amounts recorded
in its Financial Report, or to record items that were not previously recorded:
(b) The settlement after the reporting date of a court case that confirms that the entity had a liability
at the reporting date.
(c) The receipt of information after the reporting date indicating that an asset was impaired or
damaged at the reporting date. For example:
(i) The bankruptcy of a debtor that occurs after the reporting date usually confirms that a
loss already existed at the reporting date on a receivable account, and that the entity
needs to adjust the carrying amount of the receivable account; and
(ii) The disposal of damaged inventories after the reporting date may provide evidence
about their net realisable value at the reporting date.
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 (d) The discovery of fraud or errors that show that the Financial Report is incorrect.
A36. An entity shall not adjust the amounts recorded in its Financial Report to reflect events after the
reporting date that are indicative of conditions that arose after the reporting date. The following are
examples of such events:
(a) The entity decides after the reporting date, to make further grants to the community;
(b) Purchases and disposals of assets that occur after reporting date;
(c) A decision by a lender made after reporting date to forgive some amounts borrowed by the
entity; and
(d) The entity enters into significant commitments after the balance date, for example issuing
significant guarantees after reporting date.

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Section 3: Entity Information
Purpose and Value to Users
A37. The purpose of the entity information is to summarise for users what the entity does and how it is
organised. This information will assist users in their understanding of the entity and help particularly
with their interpretation of the Financial Report.
Required Information
A38. The entity information shall provide general descriptive information about the entity and its activities.
This information shall comprise:
(a) The entity’s name, type of entity and legal basis (if any);
(b) The entity’s purpose or mission (the key difference the entity is trying to make);
(c) A description of the structure of the entity’s operations (including governance arrangements);
(d) The main sources of the entity’s cash and resources;
(e) The main methods used by the entity to raise funds;
(f) The entity’s reliance on volunteers and donated goods or services; and
(g) Any additional information that is considered essential to users’ overall understanding of the
entity.
A39. The amount of detail will depend on the size of the entity and the complexity of its operations.

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Section 4: Statement of Service Performance
Purpose and Value to Users
A40. The purpose of the statement of service performance is to provide mainly non-financial information to
help users understand what the entity did during the financial year.
Required Information
A41. Service Financial Reporting is based around two elements:
(a) Outcomes: what the entity is seeking to achieve in terms of its impact on society; and
(b) Outputs: the goods or services that the entity delivered during the
year. A42. The statement of service performance shall:
(a) Describe the outcome(s) that the entity is seeking to achieve or influence through the delivery of
its goods or services. The outcomes are likely to be closely related to the mission/purpose reported
in the entity information section of the Financial Report. The main difference is that the
mission/purpose is usually stated in broad or general terms and applies over the life of the entity.
By contrast, the description of the outcomes in the statement of service performance should be
more specific and focused on what the entity is seeking to achieve over the short to medium-term;
and
(b) Describe, and quantify to the extent practicable, the outputs (goods or services) the entity has
delivered for the current year.
A43. The statement of service performance need include only the outputs that are significant to the
performance of the entity. It is not expected to include a detailed account of everything the entity does.
Optional Information
A44. An entity may wish to report additional information such as:
(a) Additional output measures:
(i) Appropriate quality measures of goods or services delivered;
(ii) A measure of the timeliness of delivery of the entity’s goods or services if this is important
to the recipient;
(iii) An allocation of revenue and expenses related to each category of the entity’s outputs; and
(iv) A quantification of the contributions from volunteers in terms of hours or full-time staff
equivalents (this figure may be estimated, and shall be noted as such if this is the case).
(b) Comments on those factors which affect the achievement of the outcomes. This might include the
working relationships between volunteers and employees, decisions to broaden or narrow the
delivery of services, or the impact of factors external to the entity – such as economic, legal and
geographical factors;
(c) The entity’s plans for the financial year being reported on, and an explanation of actual
performance achieved against the plans set by the entity; and
(d) Any additional information that is considered to be relevant to users’ understanding of the entity’s
outcome goals, or the delivery of goods or services.
A45. The way in which the statement of service performance is presented can enhance the user’s understanding
of the entity. Sometimes a pictorial representation of the entity’s achievements during the financial year
presents the story more clearly than words or numbers only.

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Section 5: Statement of Financial Performance
Purpose and Value to Users
A46. The purpose of the statement of financial performance is to report all revenue and expenses of the entity
for the financial year. The statement provides users with information about the entity’s financial
performance, including its revenue, expenses and the resulting surplus or deficit generated during the
financial year.
Format of Statement of Financial Performance
Required Information
A47. The statement of financial performance shall be presented as follows:

Revenue (by category) xx

Less expenses (by category) xx
Surplus/(Deficit) xx

A48. If the entity pays income tax, this shall be shown as a separate line item after surplus or deficit, with a
further total called Surplus/(Deficit) after Tax also reported.
Optional Information
A49. Where the making of grants and donations is a major activity of the entity, the following format may be
used:

Revenue (by category) xx

Less expenses (by category) xx
Surplus/(Deficit) before grants and donations made xx
Less grants and donations made xx
Surplus/(Deficit) xx

A50. Additional line items, headings and subtotals may be presented in the statement of financial performance
when such presentation will help users to understand the entity’s financial performance.
Revenue
A51. Revenue is the cash and other resource inflows of the entity, other than inflows from borrowings, sale of
assets, or contributions of capital from owners (see paragraph A54).
A52. Revenue can come from various sources. Examples include public donations, grants from philanthropic
trusts, donations and fees from members, funding for the provision of goods or services (including
government contracts) and proceeds from the sales of goods or services (including trading revenue from
commercial activities).
A53. Revenue includes only amounts received and receivable by the entity on its own account. Amounts
collected on behalf of others (that is, as agent of another entity) are not revenue of the entity. However,
if there is a commission involved in this collection arrangement the commission received would be
recorded as revenue (see also paragraphs A84–A87).
A54. Some NFPE have owners and/or members who contribute capital (often occurring at start up).
Contributions to the entity by these owners and/or members (other than membership fees, donations and
fees for services) are classified as funds contributed by owners or members in the statement of financial
position, and not as revenue (see also paragraphs A140–A141).

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Required Information
A55. In order to make information understandable to users, revenue shall be aggregated and separately presented
in categories. As a minimum, the following aggregated categories shall be reported separately:
(c) Donations, fundraising and other similar revenue;
(d) Fees, subscriptions and other revenue from members;
(e) Revenue from providing goods or services; and
(f) Interest, dividends and other investment revenue.
A56. Category (a) above includes grants and donations received from the public and other organisations, for
example, central or local government, charitable trusts, foundations and other philanthropic agencies. It
also includes any revenue from fundraising activities. Grants received from the government or other
agencies that are in substance a contract for delivery of goods or services would be included in category
(c) above. Any revenue from members, including donations, would be included in category (b).
A57. Entities need report only the minimum categories specified in paragraph A54 separately when the
category is applicable and significant to the entity.
A58. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A54, provided that the separate categories are still maintained.
A59. If there is difficulty in determining the category that should be used for a particular transaction, the entity
shall make its best estimate of the appropriate classification. This classification shall then be used
consistently in future periods so that the information reported is comparable over time.
Optional Information
A60. The minimum categories specified in paragraph A54 may be disaggregated, or additional categories may
be presented in the statement of financial performance, when such presentation will enhance users’
understanding of the entity’s financial performance. Possible disaggregated or additional categories are
listed below.
(a) Donations from the public;
(b) Fundraising revenue;
(c) Grants not directly related to service delivery;
(d) Fees and subscriptions from members;
(e) Donations or offerings from members;
(f) Revenue from grants or contracts for service with central or local government;
(g) Revenue from grants or contracts for service with non-governmental agencies;
(h) Revenue from sales to the public;
(i) Revenue from sales to members;
(j) Revenue from commercial activities;
(k) Lease or rental revenue;
(l) Interest or dividend revenue; and
(m) Other revenue.
A61. Disaggregated or additional categories should be used only where doing so is necessary to provide users
with an understanding of the main revenue sources of the entity. Too many categories can make it
difficult for users to understand the overall picture. The number of disaggregated or additional categories
used should therefore be limited to those that are really necessary.
A62. Breakdowns of the minimum categories, or the disaggregated or additional categories, may be provided in
the notes to the Financial Report. For example, fundraising from the public may be further
disaggregated by fundraising campaign or type, such as by street collection, postal appeal, raffles or
12
 charity auction. The entity may also elect to include in the notes to the Financial Report a list of donors or
grant providers, together with a summary of their contributions, if it considers that this is useful
information. The objective is to provide a breakdown that gives the most useful information to users of
the Financial Report.
Accounting for Revenue
A63. Revenue shall be recorded on the occurrence of a recognition event. This is when there is a legal right to
receive cash either now or sometime in the future. The timing of the recording of specific revenue types
is provided in Table 1.
Table 1: Recording of Specific Types of Revenues

Source When to Record Comments

Donations, fundraising and other similar revenue

Fundraising – cash If no “use or return” condition attached May be received in the form of donations or
(that is, no requirements to return the from the sale of goods or services.
funds if they are not used as intended) It is rare that fundraising has a “use or return”
record as revenue when cash is received. condition attached. Funds may be raised for a
specific purpose; this is not a condition but a
restriction of use.

Fundraising – other If the entity receives an asset refer to As part of a fundraising campaign the entity
section on “donated assets” below. may receive donations of assets (other than
If the entity receives goods or services cash) which it may keep, or the entity may
refer to section on “donated goods or receive donated goods which it may sell to raise
services (other than donated assets)” funds.
below.

Donations and grants with no “use or Record as revenue when cash received. Recording as revenue shall not be deferred
return” condition attached even if the resources are received in advance of
any expense on the activity funded by the
donation or grant.

Grants for current operations with Record as revenue on receipt. A grant for current operations might be to help
no “use or return” condition attached staff a drop-in centre for new mothers, whereas
a grant for capital purposes might be to
Grants for capital purposes with no “use Record as revenue on receipt.
contribute to a new building.
or return” condition attached

Grants that are service contracts On receipt of grant record asset received The liability as at reporting date reflects the
which have a “use or return” condition (generally cash) and a liability. As the extent to which obligations under the service
attached conditions are met (i.e. services provided) contract have not been satisfied.
the liability is reduced and revenue is
recorded.

Grants and donations that have a “use On receipt of grant record asset received The liability as at reporting date reflects the
or return” condition attached (generally cash) and a liability. As the extent to which conditions have not been
conditions are met the liability is satisfied.
reduced and revenue is recorded.

Donated assets Significant donated assets with useful Significant donated assets that are recorded:
lives of 12 months or more: Record on Disclose in the notes to the Financial Report
receipt at readily obtainable values such as details of the assets in accordance with the
rateable value or government value. disclosure requirements of this Standard in
Significant donated assets that are relation to the particular class of asset (see
difficult to value such as intangible assets, paragraphs A190–A191).
highly specialised assets, and heritage Significant donated asset not recorded: Details
assets: Do not record. are disclosed in the notes to the Financial Report
Other donated assets: Do not record. (see paragraph A192).

13
Source When to Record Comments

Donated goods or services (other than Do not record Significant donated goods or services (including
donated assets) services in kind) are to be disclosed in the notes
to the Financial Report (see paragraph A68).

Pledges and bequests Record as revenue on receipt of the cash Disclosure of known pledges and bequests not
or significant asset. yet received is optional.

Fees, subscriptions and other revenue from members

Fees and subscriptions in exchange for If the goods or services are of similar Any fees or subscriptions received in advance or
goods or services or to purchase goods value in each time period (for example, the period to which they relate should be
or services at prices lower than those a monthly magazine or monthly access recorded as a liability.
charged to non-members to members’ facilities): Record as
revenue evenly over the period in which
the items are provided to the members.
If the goods or services vary in value
from period to period: Record as revenue
proportionally on the basis of the value of
each item in relation to the total estimated
value of all items covered by the
subscription.

Other fees and subscriptions Record as revenue when cash received. Any fees or subscriptions received in advance of
the period to which they relate should be
recorded as a liability.

Donations from members with no “use Record as revenue when cash received. Recording as revenue shall not be deferred even
or return” conditions attached if the resources are received in advance of any
expense on the activity funded by the donation.

Donations from members that have “use On receipt of donation record asset The liability as at reporting date reflects
or return” conditions attached to them. received (generally cash) and a liability. the extent to which conditions have not
As the conditions are met the liability is been satisfied.
reduced and revenue is recorded.

Revenue from providing goods or services

Sale of goods Record as revenue when the goods are If the purchaser pays before they receive
sold (this is usually when the goods are their goods, the entity records a liability.
received by the purchaser). If the purchaser does not pay on receipt of the
goods, the entity records a debtor.

Provision of services Record as revenue by reference to the The stage of completion of a service may be
stage of completion of the service at determined in many ways including:
reporting date, based on the actual (a) On an event by event basis if that is the
service provided as a percentage of the basis for charging; or
total service to be provided.
(b) Services performed to date as
a percentage of total services.

Entrance fees and one-off fees Record as revenue when the event takes Any fees received for events that have not
place. yet taken place are recorded as a liability.

Subscriptions to a series of events Record as revenue as events occur, Any subscriptions received for events that have
(including tuition fees) allocating to each event on a basis that not yet taken place are recorded as a liability.
reflects the extent to which services are
performed at each event.

14
 Source When to Record Comments

Lease or rental revenue Record as revenue on a straight-line basis If the lessee pays in advance, the entity (as
over the term of the agreement, unless lessor) records a liability being the amount of
another systematic basis is representative the advance payment.
of the time pattern of the user’s benefit. If the lessee pays after the leased asset is used,
the entity (as lessor) records as an asset any
amount owed to the entity.

Interest, dividends and other investment revenue

Interest Record as revenue as it is earned during If the borrower pays interest in advance, the
the period. entity records a liability being the amount of
the advance payment.
If the borrower pays interest in arrears (after the
investment period has elapsed), the entity
records as an asset, any amount owed to the
entity as a receivable.

Dividends and similar revenue Record as revenue when receivable, for Dividends declared after the end of the financial
example when the dividend is declared year of the entity are not recorded as revenue.
(which would usually be before it is
paid).
Other revenue

License fees and royalties Record as revenue as they are earned in As a practical matter, this may be on a straight
accordance with the substance of the line basis over the term of the agreement.
relevant agreement.

Commission for acting on behalf of Record as revenue when receivable, which Revenue includes only amounts received and
another entity as the agent of that other would usually be defined in the agency receivable by the entity on its own account, not
entity (the principal) agreement. the amounts collected for the principal.

Gain on sale of an asset Record as revenue when control of the The gain is the proceeds from the sale less the
asset transfers to the new owner. amount recorded as the value of the asset prior
to its sale.

Revenue with and Without Conditions

A64. Revenue from donations, grants and fundraising without “use or return” conditions attached is recorded
when the cash or significant assets are received.
A65. Some donations and grants have conditions attached. Sometimes these can be of a general nature, for
example to be used for specific purposes by the entity, and the entity is not legally required to return the
money if it is not used for that purpose. Other donations and grants can be received on a “use or return”
basis, for example when the entity is required to either use the donation/grant as specified by the
donor/grantor or return the donation/grant to the donor/grantor.
A66. Where revenue has conditions attached, it is necessary to determine whether those conditions lead to a
liability. Revenue that has a “use or return” condition, shall initially be recorded as a liability until the
condition has been met, at which point the revenue shall then be recorded.
A67. For the purposes of this Standard donations or grants with conditions attached, but which are not “use or
return” conditions, shall be accounted for in the same way as revenue without conditions (see
paragraph A63). In these circumstances entities may elect to keep track of these unconditional but
“tagged” donations or grants by establishing a designated reserve within accumulated funds (see
paragraph A143). Note, however, that under this approach the donation/grant received is still recorded as
revenue and any subsequent spending is recorded as an expense of the entity; the reserve fund is just a
vehicle to keep track of the amount of the unused donation/grant.
A68. Figure 1 illustrates the process an entity should undertake to determine how to record revenue with or
without conditions attached.

15
 Figure 1: Decision Tree: Accounting for Revenue with and without Conditions

Grant or donation
(cash or significant asset)
received?

Yes

No
Is there a condition
Record as revenue.
attached? Record spending of grant
as an expense. May use a
Yes separate reserve within
Accumulated Funds to
keep track of unspent
Is it a “use or return” No Record as revenue; disclose balance.
condition? conditions in notes to the
Financial Report.

Yes

Record as a liability. As
conditions are met record
as revenue.

Goods or Services in Kind

A69. Entities are not required (but may if they wish) to record as revenue goods or services received in kind,
unless they are significant donated assets (see paragraph A112). However, entities shall provide
information about significant goods or services received in kind in the notes to the Financial Report
(see paragraph A189).

Expenses
A70. Expenses are the cash and other resource outflows from the entity, other than outflows to settle liabilities
or purchase assets, or which are distributions of capital to owners (see paragraph A147).
A71. Expenses do not include prepayments. Executory contracts are also excluded (an executory contract is
one where neither party has performed their obligation under the contract, for example, inventory that
has been ordered but not received and therefore not paid for).
A72. Expenses include only amounts paid and payable by the entity on its own account. Amounts paid on
behalf of others (that is, as agent of another entity) are not expenses of the entity (see
paragraphs A84-A87).
Required Information
A73. In order to make information understandable to users, expenses shall be aggregated and separately
presented in categories. As a minimum, the following aggregated categories shall be reported separately:
(a) Expenses related to public fundraising;
(b) Volunteer and employee related costs;
(c) Costs related to providing goods or services; and
(d) Grants and donations made.
A74. Entities need report only the minimum categories specified in paragraph A73 separately when the
category is applicable and significant to the entity.
A75. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A72, provided that the separate categories are still maintained.

16
17
A76. If there is difficulty in determining the category that should be used for a particular transaction, the entity
shall make its best estimate of the appropriate classification. This classification shall then be used
consistently in future periods so that the information reported is comparable over time.
A77. Reimbursements for expenses incurred by employees on behalf of the organisation are not classified as
employee expenses. For example, reimbursing an airfare for an employee to attend a conference. This is
recorded in the appropriate category of expenses (for example, expenses relating to providing goods or
services if that was the reason the travel took place).
Optional Information
A78. The minimum categories specified in paragraph A73 may be disaggregated, or additional categories may
be presented in the statement of financial performance, when such presentation will enhance users’
understanding of the entity’s financial performance. Possible disaggregated or additional categories are
listed below.
(g) Administration and overhead costs;
(h) Lease and rental expense;
(i) Affiliation fees;
(j) Interest expense;
(k) Bad debts;
(l) Depreciation;
(m) Impairment charges; and
(n) Other expenses.
A79. Disaggregated or additional categories should be used only where doing so is necessary to provide users
with an understanding of the main expenses of the entity. Too many categories can make it difficult for
users to understand the overall picture. The number of disaggregated or additional categories used should
therefore be limited to those that are really necessary.
A80. Breakdowns of the minimum categories or the disaggregated or additional categories may be provided in
the notes to the Financial Report. For example, employee related payments could be disaggregated into
salaries and wages, employer superannuation contributions and other costs relating to employees. The
objective is to provide a breakdown that gives the most useful information to users of the Financial
Report.
Accounting for Expenses
A81. Expenses shall be recorded on the occurrence of a recognition event. This is where there is a legal
obligation to pay cash either now or sometime in the future (this is normally referred to as the point at
which an expense is “incurred”). The timing of the recording of specific expense types is provided in
Table 2.

Table 2: Recording of Specific Types of Expenses

Source When to Record Comments

7
Expenses related to public fundraising

Advertising costs, printing of fundraising Record the expense when the advertising This category would include expenses
materials, staff training service is received or the other expense is associated with seeking gifts or donations.
incurred.

Amounts paid to third party fundraisers Record the expense when it is incurred.

18
Source When to Record Comments

Volunteer and employee related costs

Wages and salaries, annual leave, Record the expense as staff provide Amounts for leave entitlements are
performance related bonuses, and any services and become entitled to wages and recorded as liabilities.
benefits such as medical care, housing, salaries and leave entitlements. Amounts deducted from staff wages and
and free or subsidised goods or services salaries and held to pay to a third party are
for current employees for operating recorded as liabilities.
activities

Wages and salaries related to the Do not record as an expense – include

production of inventory or other in cost of asset.
assets
Wages and salaries paid in advance Record the expense when the staff provide Record as an asset (prepayment) until
services. the relevant services are provided.

Bonuses Record the expense when the employee is

notified that the bonus has been granted.

Superannuation contributions Record the expense as staff provide This category comprises the entity’s
services. contribution or other superannuation
schemes on behalf of staff. Amounts not
yet paid over are recorded as liabilities.

Honoraria Record the expense when the honoraria are The payment of honoraria is usually
paid. discretionary so there is no obligation on
the entity prior to payment.

Vouchers provided to volunteers (such as Record the expense when the voucher is
petrol vouchers) purchased.

Other (including ACC levies) Record the expense in accordance with the Often recorded as an expense evenly over
relevant agreement. the period of the agreement.

Costs related to providing goods or services

Inventory sold or distributed Record the expense when the goods are Where donated inventory is not recorded as
sold or distributed. an asset, there is no expense to record on
sale or distribution.

Inventory written down or written off Record the expense when it is determined Inventory may lose value as:
that the amount on the statement of (a) It ages (for example, fresh food);
financial position is greater than the
(b) Future customers would not pay
value of the inventory (either as a sale or
as much for the inventory;
a distribution).
(c) Stock becomes obsolete; and
(d) The inventory is less valuable to
service recipients.

Administration and overhead costs Record the expense when the cost is Examples include premises rental,
incurred. utilities (rates, power, phone),
maintenance, IT costs, stationery etc.
Other costs associated with the delivery Record the expense when the cost is
of services incurred.

Grants and donations made

Grants and donations made Record the expense when the grant or
donation has been approved and the
recipient advised.

19
 Source When to Record Comments

Other expenses

Affiliation fees Record the expense when the fees are due
to be paid.

Interest expense Record the expense as it is incurred during This category is the amount paid during the
the period. period which relates to borrowings.
Includes any interest amount owing but not
yet paid.

Impairment charges Record the expense when it is apparent that The impairment expense is the amount by
an asset is recorded at an amount that is which the asset’s recorded amount is
(changes in the value of assets)
greater than its net realisable value. reduced.

Impairment charges relate mostly to

property, plant and equipment, inventory,
and receivables (which become bad debts).

See also Table 3 for further discussion on

impairment.

Depreciation Record the expense at year end based on See also Table 3 for further discussion on
the established depreciation rate. depreciation.

Tax expense Record the expense in the financial year to If a tax return is filed, record the tax
which the tax payable relates. payable at the amount in the tax return.
Otherwise, record at an estimated amount.

Loss on sale of an asset Record the expense when control of the The loss is the amount recorded as the
asset transfers to the new owner. value of the asset prior to its sale, less the
proceeds from the sale.

Other expenses Record the expense when it is incurred. It may be useful to consider the above
principles.

Other Information
Required Information
A82. The statement of financial performance shall include any additional information that the entity considers
necessary for users to understand the financial performance of the entity.
Optional Information
A83. An entity may include the entity’s budgets or plans for the current financial year if they are available.

Amounts Payable or Receivable on Behalf of Others

A84. Revenue and expenses include only the amounts relating to the entity on its own account, that is, where it
is the “principal”. Where the entity is acting as an “agent” for another party (for example, the
Government, another entity, or some other third party), the amounts collected or paid belong to that other
party rather than the entity.
A85. An entity is a principal (that is, acting on its own behalf) when:
(o) The entity has the primary responsibility for providing the goods or services to the beneficiary or
customer;
(p) The entity establishes the prices, either directly or indirectly, for those goods or services; and

20
 (q) The entity bears the customer’s credit risk for any amount receivable from the customer.
A86. An example of the entity as principal is when the entity organises a conference for a group of
NFPEs, receives the conference fees, and is responsible for all the conference-related payments such as
advertising and catering.
A87. An entity is acting as an agent when it does not have exposure to the significant risks and rewards
associated with the transactions. One feature indicating that an entity is acting as an agent is that the
amount the entity earns is predetermined, being either a fixed fee per transaction or a stated percentage of
the amount billed to the customer.

21
Section 6: Statement of Financial Position
Purpose and Value to Users
A88. The purpose of the statement of financial position is to provide a snapshot of the entity’s assets, liabilities
and accumulated funds (the difference between assets and liabilities) at a certain point in time (being the
reporting date). This is what the entity owns, what the entity owes, and the value of the members’
financial interests in the entity. The statement provides users with information about the financial
sustainability of the entity, including the assets that can be used to run the entity in the future, and the
liabilities that will have to be met in the future from cash balances and other assets.
Format of Statement of Financial Position
Required Information
A89. The statement of financial position shall be presented as follows:

Assets (by category) xx

Less Liabilities (by category) xx
Assets less Liabilities xx
Accumulated Funds (by category) xx

A90. Alternatively if the entity considers it more relevant to users of the Financial Report, the entity may use
the following format:

Assets (by category) xx

Liabilities (by category) xx
Plus Accumulated Funds (by category) xx
Total Liabilities and Accumulated Funds xx

A91. Additional line items, headings and subtotals may be presented in the statement of financial position
when such presentation will help users to understand the entity’s financial performance and position.
Assets
A92. Assets are resources of the entity that are expected to provide benefits to the entity in the future.
Required Information
A93. In order to make information understandable to users, assets shall be aggregated and presented separately
in categories. As a minimum, the following aggregated categories shall be reported separately and split
between current and non-current (see paragraph A104):
(a) Bank accounts and cash;
(b) Debtors and prepayments;
(c) Inventory;
(d) Property, plant and equipment; and
(e) Investments.
A94. Bank Accounts and cash comprise petty cash, cheque or savings accounts, and deposits held at call with
banks.
A95. Debtors (sometimes called accounts receivable) comprise amounts owed to the entity by customers or
others.

22
A96. Prepayments are expenses paid in advance of a good or service being received by the entity (such as rent,
insurance or salaries and wages).
A97. Inventories are materials or supplies that are to be consumed in producing goods or services, held for sale
or distribution in the ordinary course of operations, or are in the process of production for sale or
distribution. Inventories include food, clothing or goods held for distribution, stocks held in opportunity
and charity shops, information brochures printed for the entity but not yet distributed, goods purchased
for resale, consumable stores, maintenance materials, spare parts for plant and equipment, and work-in-
progress, such as educational/training course materials under development.
A98. Property, plant, and equipment (sometimes called fixed assets) are tangible items that are used in the
production or supply of goods or services, or for administrative purposes, and are expected to be used
during more than one financial year.
A99. Investments are shares, term deposits, bonds, units in unit trusts, or similar instruments held by the entity.
A100. Entities need report only the minimum categories specified in paragraph A93 separately when the
category is applicable and significant to the entity.
A101. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A93, provided that the separate categories are still maintained.
A102. If there is difficulty in determining the category that should be used for a particular transaction, the entity
shall make its best estimate of the appropriate classification. This classification shall then be used
consistently in future periods so that the information reported is comparable over time.
A103. In presenting the statement of financial position the entity shall identify those assets which are intended
to be converted to cash within 12 months of the reporting date, for example, debtors that are expected
to be collected within a few months of reporting date, or inventories that are expected to be sold or used
within the next year. These shall then be classified as “current assets”. The remaining assets shall
then be classified as “non-current assets”.
Optional Information
A104. The minimum categories specified in paragraph A93 may be disaggregated, or additional categories may
be presented in the statement of financial position, when such presentation will enhance users’
understanding of the entity’s financial position.
A105. The main asset category where this is likely to be useful is property, plant, and equipment. A class of
property, plant, and equipment is a grouping of assets of a similar nature or function in an entity’s
operations. Possible classes of property, plant and equipment that could be reported separately (either in
the statement of financial position or in the notes to the Financial Report) are:
(a) Land;
(b) Buildings;
(c) Motor vehicles;
(d) Furniture and fixtures;
(e) Office equipment;
(f) Computers (including software); and
(g) Machinery.
A106. Disaggregated or additional categories should be used only where doing so is necessary to provide users
with an understanding of the main assets of the entity. Too many categories can make it difficult for
users to understand the overall picture. The number of disaggregated or additional categories used
should therefore be limited to those that are really necessary.
A107. Breakdowns of the minimum categories, or the disaggregated or additional categories, may be provided
in the notes to the Financial Report, for example, classes of property, plant and equipment, or different
types of inventory (such as inventories held for consumption versus inventories held for sale). The
objective is to provide a breakdown that gives the most useful information to users of the Financial
Report.

23
Accounting for Assets
A108. Assets shall be recorded on the occurrence of a recognition event and reported using the measurement
basis appropriate for the asset type. Details for recording and measuring specific asset types are provided
in Table 3.
Table 3: Recording of Specific Types of Asset

Bank Accounts and Cash (note: bank overdrafts should be separately recorded as a liability)

When to record When the cash is received (either in hand or in the bank account).

Measurement At the amount held.

Debtors

When to record When action is taken (such as goods or services sold) to give the entity the right
to collect cash in the future.
Compensation due from third parties (such as insurers) for assets that were impaired,
lost, or given up should also be recorded as a debtor (and included as revenue in the
statement of financial performance).

Initial measurement At the amount owed.

When to record impairment When it is likely that the amount owed (or some portion) will not be
collected. Record the loss as a bad debt expense.

Change measurement at reporting date Consider whether any amounts are impaired (see paragraph A108).
If the entity charges interest on overdue amounts, add this to the amount of the debtor
and record revenue.

When to no longer record When amount is collected or written off.

Prepayments

When to record When payment made.

Initial measurement At the amount relating to the future goods or services to be received.

When to record impairment If the entity is unlikely to get the service it has paid for.

Change measurement at reporting date Re-measure at the amount relating to the future services still to be received at that date.

When to no longer record (when to expense) Once the entity receives the benefit for which it has paid, the prepayment (or portion
thereof), is transferred from prepayments and is recorded as an expense.

Inventories

When to record When acquired.

Measurement Purchased inventories: At cost.

When to record impairment Goods for sale: Write-down to lower of cost and selling price.
Goods for use or distribution: Write-down if the value to the entity decreases
(for example, materials to be distributed are out of date or damaged).

Change measurement at reporting date Only if impaired.

When to no longer record (when to expense) When sold, distributed or written off.

24
 Property, Plant and Equipment (including Heritage Assets)

When to record When purchased or donated.

Initial measurement Purchased: Cost (cash price equivalent).

Donated: Current value (such as rateable value or government value).

When to record impairment Asset to be sold: If the market price for an equivalent asset falls below the carrying
amount of the asset.
Asset to be used: If the value to the entity in using the asset falls below the carrying
amount of the asset (for example, the entity no longer provides the service supported
by the asset).

Change measurement at reporting date Record depreciation – spread the cost of the asset over the expected useful life of the
asset, using a structured method such as straight line or diminishing value.
Note that land is not depreciated.

When to no longer record When sold, otherwise disposed of or written off.

Investments

When to record When purchased.

Initial measurement At the amount paid.

When to record impairment If it appears that the carrying amount of the investment will not be recovered, it shall
be written down to the current market price.

Change measurement at reporting date If the current market price falls below cost.

When to no longer record When sold, otherwise disposed of, or written off.

Other Assets

When to record When:

(a) The asset is acquired; and
(b) The asset has a cost or value that can be measured reliably.

Initial measurement At the amount paid or other value that can be measured reliably.

When to record impairment If it appears that the carrying amount of the asset will not be recovered, that is, it is
more than the current market value (if it can be determined).

When to no longer record When the asset is sold or otherwise disposed of.

Calculating Debtors
A109. In calculating the value of debtors at the end of each financial year, the entity shall assess whether there
is evidence that a receivable may not be collected. The factors to consider are:
(a) Financial difficulty of the other party;
(b) A breach of contract by the other party, such as a default in interest or principal payments;
(c) The entity granting to the other party a concession relating to debt payment; or
(d) Other information indicating that the receivable may not be collected.
Heritage Assets
A110. Some classes of property, plant and equipment may be described as heritage assets because of their
cultural, environmental, or historical significance. Examples of heritage assets include historical
buildings and monuments, archaeological sites, conservation areas and nature reserves, and works of art.
A111. Heritage assets shall be accounted for in the same manner as other property, plant and equipment (that is,
at cost or if donated then at readily obtainable current values). Heritage assets for which current values

25
 are not readily obtainable, do not need to be recorded in the statement of financial position but shall be
disclosed in the notes to the Financial Report (by class if appropriate).
Donated Assets
A112. Significant donated assets, such as significant items of property, plant and equipment, shall be recorded
at readily obtainable current values, such as rateable or government valuation, where it is practicable
to obtain such current values.
A113. Significant donated assets for which values are not readily obtainable, do not need to be recorded in the
statement of financial position but shall be disclosed in the notes to the Financial Report (by class if
appropriate).
Revaluation of Property, Plant and Equipment
A114. As specified in Table 3, purchased property, plant and equipment is to be measured on the cost basis.
However, an entity may elect to revalue a class of property, plant and equipment. Entities are more likely
to make such an election when the value of an asset had increased significantly over that asset’s life
(such as land or a building).
A115. It is important to note that once property, plant and equipment is revalued, the requirements of CFRS for
NFPEs Tier 2 mean that it is likely that the entity will need to continue measuring those assets at
revalued amount thereafter (rather than reverting back to asset cost).
A116. If the entity chooses not to revalue property, plant and equipment but considers that a current value of
some assets is useful information for users of the Financial Report, the entity may choose to disclose
that current value, and the basis (such as the, rateable or government valuation) and date of that valuation
in the notes to the Financial Report.
Assets Held on Behalf of Others
A117. Assets held as an agent on behalf of another person, entity or other third parties are not recorded as assets
of the entity. The statement of financial position should include only assets held by the entity on its own
account as principal (see paragraphs A83–A86 for a discussion on principals and agents).
Liabilities
A118. Liabilities are the amounts owed by the entity at reporting date.
Required Information
A119. In order to make information understandable to users, liabilities shall be aggregated and presented
separately in categories. As a minimum, the following aggregated categories shall be reported separately
and split between current and non-current (see paragraph A128):
(a) Bank
overdraft;
(b) Creditors and accrued
expenses;
(c) Employee costs
payable;
(d) Unused donations and grants with conditions;
and
(e) Loans
.
A120. Creditors (sometimes called accounts payable) are amounts owing to suppliers to pay for goods or
services that have been acquired in the course of the entity’s operations.

26
A121. Accrued expenses are costs incurred but not yet paid. This includes electricity, gas, telephone services
used but not yet paid, water and local authority rates payable but not yet paid, and rent for the use of
premises not yet paid.
A122. Employee costs payable are amounts owing to, but not yet paid to employees. This category includes
wages, salaries, and other employee benefit.
A123. Unused donations and grants with conditions attached are donations or grants that have a “use or return”
condition attached to them. This creates a binding obligation on the entity that is recorded as a liability
(see paragraphs A63–A67 for a further discussion on revenue with conditions). This category includes
unused revenue for service delivery contracts that have a “use or return” condition attached.
A124. Loans are amounts borrowed by the entity.
A125. Entities need report only the minimum categories specified in paragraph A119 separately when the
category is applicable and significant to the entity.
A126. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A119, provided that the separate categories are still maintained.
A127. If there is difficulty in determining the category that should be used for a particular transaction, the entity
shall make its best estimate of the appropriate classification. This classification shall then be used
consistently in future periods so that the information reported is comparable over time.
A128. In presenting the statement of financial position the entity shall identify those liabilities which are due to
be paid within 12 months of the reporting date, which shall then be classified as “current liabilities”.
The remaining liabilities shall then be classified as “non-current liabilities”.
Optional Information
A129. The minimum categories specified in paragraph A119 may be disaggregated, or additional categories
may be presented in the statement of financial position, when such presentation will enhance users’
understanding of the entity’s financial position.
A130. Disaggregated or additional categories should be used only where doing so is necessary to provide users
with an understanding of the main liabilities of the entity. Too many categories can make it difficult for
users to understand the overall picture. The number of disaggregated or additional categories used should
therefore be limited to those that are really necessary.
A131. Breakdowns of the minimum categories, or the disaggregated or additional categories, may be provided
in the notes to the Financial Report, for example, a breakdown of loans. The objective is to provide a
breakdown that gives the most useful information to users of the Financial Report.
Accounting for Liabilities
A132. Liabilities shall be recorded on the occurrence of a recognition event and reported using the measurement
basis appropriate for the liability type. Details for recording and measuring specific liability types are
provided in Table 4.
Table 4: Recording of Specific Types of Liability

Bank Overdraft

When to record When the overdraft occurs.

Measurement At the amount of the actual overdraft (not the overdraft facility).

27
 Creditors and Accrued Expenses

When to record When transaction occurs that creates the payment obligation, for example on
the receipt of goods or services from a supplier.

Initial measurement At the amount owing. If the entity has not received a supplier invoice it shall record
an accrual for an estimate of the amount to be paid

Change measurement at reporting date Review in case some part has been paid or is no longer owed (for example, a
supplier changes the arrangement to donations of goods therefore revenue will be
recorded).
When to no longer record When settled.

Employee Costs Payable

When to record When an employee has earned the entitlement or the entity has withheld amounts from
wages and salaries already paid. It is uncommon for entities with paid employees to
have no employee costs payable.

Initial measurement At the amount to be paid.

Change measurement at reporting date If employees have been granted increased wages and salaries, amounts owing may
change (for example, annual leave is based on amounts to be paid when the employee
is expected to take the leave).

When to no longer record When settled.

Unused Donations and Grants with Conditions

When to record When the grant or donation is received.

Initial measurement At the amount to be returned if the conditions are not fulfilled.

Change measurement at reporting date Assess whether the conditions have been fulfilled. If not, assess the amount of the
grant that relates to conditions that haven’t yet been fulfilled.

When to no longer record When the conditions are fulfilled.

Provisions

When to record When an event has occurred that leads to an obligation.

Initial measurement At the entity’s best estimate of the amount to be paid.

Change measurement at reporting date Review the estimate of the amount of the obligation in light of conditions at
reporting date.

When to no longer record When no obligation remains.

Loans

When to record When the amount borrowed has been received.

Initial measurement At the amount borrowed from the lender (usually referred to as the loan principal).

Change measurement at reporting date Include any loan principal outstanding and any interest owing that has not yet been
paid.

When to no longer record When all principal and interest has been paid.

Provisions
A133. A provision is a liability of uncertain timing or amount. For example, an entity’s lease of office premises
may contain conditions that require the premises to be renovated at the end of the lease, so a provision
for this is established.

28
A134. A provision shall be recorded as a liability when:
(h) The entity has a present obligation (legal or constructive) as a result of a past event;
(i) It is probable that the entity will have to settle the obligation; and
(j) The entity can make a reliable estimate of the amount of the obligation.
A135. The use of estimates is an essential part of the preparation of Financial Reports, and does not
undermine their reliability. This is especially true in the case of provisions, which by their nature are
more uncertain than most other liabilities. Except in extremely rare cases, an entity should be able to
make an estimate of the obligation that is sufficiently reliable to use in recording a provision.
Possible Future Liabilities
A136. The only liabilities recorded in an entity’s statement of financial position are those where obligations
exist at the reporting date as a result of a past event. Therefore, no provision should be made for
liabilities that might result from a future event as these liabilities don’t yet exist. For example, costs
likely to be incurred in the future in order to continue an entity’s activities in the future are not liabilities.
Neither are expected future operating losses.
Contingent Liabilities
A137. Contingent liabilities are not recorded in the statement of financial position but are reported in the notes
to the Financial Report (see paragraphs A199–A201).
Accumulated Funds
A138. Accumulated Funds are the owners’ or members’ financial interest in the entity. It is the component that
balances the statement of financial position.
Required Information
A139. In order to make information understandable to users, accumulated funds shall be aggregated and
presented separately in categories. As a minimum, the following aggregated categories shall be reported
separately:
(a) Capital contributed by owners or members (if any);
(b) Accumulated surpluses or deficits; and
(c) Reserves.
A140. Contributions from owners means contributions to the entity by external parties that establish a financial
interest in the equity of the entity, which:
(a) Conveys to owners the entitlement to:
(i) Distributions by the entity during its life; and/or
(ii) Distributions of any excess of assets over liabilities in the event of the entity being wound
up; and/or
(b) Gives the owner or member a voice in the management of the entity as an owner; and/or
(c) Can be sold, exchanged, transferred, or redeemed.
A141. A contribution from owners (see paragraph A54 for a further discussion) may, but does not necessarily
need to, be evidenced by a formal ownership document, such as a share certificate.
A142. Accumulated surpluses or deficits are the total of all the surpluses and deficits from the commencement
of the entity, excluding returns of capital or other distributions paid to owners/members in their capacity
as owners/members (if any), and amounts transferred to other reserves.
A143. Reserves are of two types:
(a) Restricted reserves which may be used only for a particular purpose (the restriction). The
restriction may apply to the use of revenue from the funds such as interest received, or to changes

29
 to the capital fund, or to both. To be a restricted reserve the restriction must be set by an external
party, for example:
(i) The express wishes of a donor (including in relation to endowment funds);
(ii) A specific purpose agreed with a donor; or
(iii) The terms of a fundraising appeal.
(b) Discretionary reserves that have been created by a transfer from accumulated surpluses or deficits
as a decision of the entity so that it sets aside resources for a particular purpose. A feature of this
type of reserves is that they may be transferred back to accumulated surpluses or deficits
whenever the entity chooses.
A144. Entities need report only the minimum categories specified in paragraph A139 separately when the
category is applicable and significant to the entity.
A145. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A139, provided that the separate categories are still maintained.
Accounting for Accumulated Funds
A146. Contributed funds shall be recorded at the amount contributed by, less any contributed capital returned
to, owners/members.
A147. Accumulated surpluses or deficits shall be recorded at the opening balance plus the current period’s
surplus or deficit from the statement of financial performance, less distributions paid to owners/members,
less amounts transferred to reserves, plus amounts transferred from reserves.
A148. Reserves shall be recorded at the opening balance of the reserve for the period plus transfers to/from
accumulated surpluses or deficits. The amount of the transfer should be equal to the amount of any
revenue or expenses relating to the purpose of the reserve that were recorded in the statement of financial
performance and therefore included in the current period’s surplus or deficit.
Other Information
Required Information
A149. The statement of financial position shall include any additional information that the entity considers
necessary for users to understand the financial position of the entity.
Optional Information
A150. An entity may include the entity’s budgets or plans for the current financial year if they are available.

30
Section 7: Statement of Cash Flows
Purpose and Value to Users
A151. The purpose of the statement of cash flows is to provide information about the cash flows of the entity,
which can have a different timing to the accruals that are reported in the statement of financial
performance. Cash flow information allows users to determine how the entity has received cash, and how
the cash was used during the year. An understanding of the timing and certainty of cash flows is helpful
to users in making decisions about the sustainability of the entity and whether resources have been
allocated effectively.
A152. The difference between the statement of cash flows and the statement of financial performance is that:
(a) The statement of cash flows reflects the cash movements during the period, regardless of when
the transaction or event is recorded in the statement of financial position or statement of
financial performance; and
(b) The statement of financial performance reflects the revenues and expenses that relate to the
financial year, regardless of the timing of the associated cash flows.
Format of Statement of Cash Flows
Required Information
A153. The statement of cash flows shall be presented as follows:

Cash Flows from Operating Activities (by category) xx

Cash Flows from Investing and Financing Activities (by category) xx
Net Increase/(Decrease) in Cash xx
Add Opening Cash Balance xx
Closing Cash Balance xx

A154. Alternatively, if the entity considers it more relevant to users, the entity may report cash flows from
investing activities (by category) separately from cash flows from financing activities (by category).
A155. Investing activities are the acquisition and disposal of long-term assets and other investments not
included in the cash balance. For example, the purchase of property, plant and equipment, or
investments. Financing activities comprises receipts and payments relating to long-term borrowing by
the entity (the principal amount only), and any capital contributions to/from owners or members (if any).
A156. Operating activities are the activities of the entity that are not investing or financing activities. They
include the normal operations of the entity, for example, providing goods or services.
A157. The statement of cash flows does not include:
(a) Cash receipts collected and payments made on behalf of others when the cash flows reflect the
activities of the other party rather than those of the entity (see paragraphs A84–A87). For
example, rent collected on behalf of, and paid over to, the owners of properties; and
(b) Transactions not involving cash, for example depreciation and donated goods or services.
Cash Flows from Operating Activities
Required Information
A158. In order to make information understandable to users, cash flows from operating activities shall be
aggregated and presented separately in categories. As a minimum, the following aggregated categories
shall be reported separately:
Cash Receipts:
(a) Donations, fundraising and other similar receipts;
(b) Fees, subscriptions and other receipts from members;

31
 (c) Receipts from providing goods or services; and
(d) Interest, dividends and other investment receipts.
Cash Payments:
(e) Payments to suppliers and employees; and
(f) Donations or grants paid.
A159. Entities need report only the minimum categories specified in paragraph A158 separately when the
category is applicable and significant to the entity.
A160. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A158, provided that the separate categories are still maintained.
A161. If there is difficulty in determining the category that should be used for a particular transaction, the entity
shall make its best estimate of the appropriate classification. This classification shall then be used
consistently in future periods so that the information reported is comparable over time.
Optional Information
A162. The minimum categories specified in paragraph A158 may be disaggregated, or additional categories
may be presented in the statement of cash flows, when such presentation will enhance users’
understanding of the entity’s cash flows.
A163. Disaggregated or additional categories should be used only where doing so is necessary to provide users
with an understanding of the main cash flows of the entity. Too many categories can make it difficult for
users to understand the overall picture. The number of disaggregated or additional categories used should
therefore be limited to those that are really necessary.
A164. Breakdowns of the minimum categories or the disaggregated or additional categories may be provided in
the notes to the Financial Report, for example, a breakdown of cash payments to suppliers. The
objective is to provide a breakdown that gives the most useful information to users of the Financial
Report.
Cash Flows from Investing and Financing Activities
Required Information
A165. In order to make information understandable to users, cash flows from investing and financing activities
shall be aggregated and presented separately in categories. As a minimum, the following aggregated
categories shall be reported separately:
Cash Receipts:
(a) Receipts from the sale of property, plant and equipment;
(b) Receipts from the sale of investments;
(c) Proceeds from loans borrowed from other parties; and
(d) Capital contributed from owners or members.
Cash Payments:
(e) Payments to acquire property, plant and equipment;
(f) Payments to purchase investments;
(g) Repayments of loans borrowed from other parties; and
(h) Capital repaid to owners or members.
A166. Investments are shares, term deposits, bonds, units in unit trusts, or similar instruments held by the entity.
They include loans made by the entity.
A167. Entities need report only the minimum categories specified in paragraph A165 separately when the
category is applicable and significant to the entity.
A168. The minimum categories may be described using terminology appropriate for the entity and need not use
the titles used in paragraph A165, provided that the separate categories are still maintained.
32
A169. If there is difficulty in determining the category that should be used for a particular transaction, the entity
shall make its best estimate of the appropriate classification. This classification shall then be used
consistently in future periods so that the information reported is comparable over time.
Cash Balances
Required Information
A170. Cash balances is the same amount reported as “bank accounts and cash” less bank overdrafts as reported
in the statement of financial position. It includes petty cash, cheque or savings accounts, deposits held at
call with banks, and bank overdrafts (see paragraph A94).

33
Section 8: Statement of Accounting Policies
Purpose and Value to Users
A171. The purpose of the statement of accounting policies is to disclose the specific policies and practices
applied by the entity in preparing its Financial Report. This provides users with an understanding of the
basis on which the Financial Report has been prepared.
Format of Statement of Accounting Policies
Required Information
A172. The statement of accounting policies shall comprise two components:
(a) Accounting policies applied; and
(b) Changes in accounting policies.
Accounting Policies Applied
A173. Accounting policies applied are the specific policies and practices used by the entity in preparing its
Financial Report for the reporting period.
Required Information
A174. As a minimum, the following shall be included in the statement of accounting policies.
Basis of Preparation
A175. The statement of accounting policies shall disclose that:
(a) The entity is eligible to apply this Standard, the criteria specified in relevance regulation that
allows it to do so, and the fact that it has elected to do so;
(b) All transactions are reported using the accrual basis of accounting; and
(c) The Financial Report has been prepared on the assumption that the reporting entity is a going
concern, or if this is not the case the fact that the Financial Report has been prepared on the
basis that the entity will not continue to operate for more than 12 months in the future (see
paragraph A176).
A176. The Financial Report is normally prepared assuming that the entity will continue in operation for the
foreseeable future (normally considered to be a minimum of 12 months from reporting date). This
assumption may not be appropriate in some circumstances. For example, it may not be appropriate if the
governing body determines after the reporting date either (a) that there is an intention to liquidate the
entity or to cease operating, or (b) that there is no realistic alternative but to do so. If the
assumption of continuity is not appropriate this needs to be disclosed in the statement of accounting
policies (additional disclosures are also required in the notes to the Financial Report – see paragraph
A211). The entity shall consider whether different specific accounting policies are more appropriate in
these circumstances, for example valuing assets at fire sale value.
Goods and Services Tax (VAT)
A177. The statement of accounting policies shall disclose:
(a) Whether the entity is registered for VAT; and
(b) Whether the Financial Report is prepared on a VAT-inclusive or VAT-exclusive basis.
Specific Accounting Policies
A178. The statement of accounting policies shall disclose the accounting policies for each significant type of
transaction or balance. These policies shall be consistent with the requirements of this Standard
(including the requirements of paragraph 6).
A179. The policies may be reported at an appropriate level of aggregation, for example, “revenue from the sale
of services” as a category of accounting policies.

34
A180. Where an entity has elected to apply a IAS 8 Accounting Standards in place of a requirement of this
Standard, the IAS 8 Accounting Standard applied shall be disclosed.
Changes in Accounting Policies
A181. A change in the accounting treatment, recording, or measurement of a transaction or other event is
regarded as a change in accounting policy. For example, the initial application of a policy to revalue
assets (rather than measuring them at cost) is a change in accounting policy.
A182. An entity shall change an accounting policy only if the change:
(a) Is required by this Standard; or
(b) Is in accordance with this Standard and results in the statements providing more reliable or more
relevant information about the effects of transactions or other events and conditions on the entity’s
service performance, financial performance, financial position, or cash flows.
Required Information
A183. When an entity changes its accounting policy an entity shall disclose:
(a) The reason for the change, a description of the change in policy, and how and from when this
change in policy has been applied; and
(b) For the current period, for each statement line item affected, the amount as calculated under the
previous accounting policy.
A184. Where there have been no changes to accounting policies during the reporting period, that fact shall be
reported.
Accounting for Changes in Accounting Policies
A185. Changes in accounting policies shall be applied from the beginning of the current reporting period.

35
Section 9: Notes to the Financial Report
Purpose and Value to Users
A186. The notes to the Financial Report contain information that expands on the information included in other
parts of the Financial Report as well as providing any additional relevant information. This is designed to
provide users with a greater understanding of the information reported in the statements of service
performance, financial performance, financial position and cash flows.
Required Information
A187. The following matters shall be included in the notes to the Financial Report.
Significant Grants and Donations with Conditions which have not been Recorded as a Liability
A188. Where the entity has received a significant grant or donation (including donated assets) with conditions
attached which have not been fulfilled at reporting date, and the significant grant or donation was
recorded as revenue because the conditions were not “use or return” conditions that resulted in the
recording of a liability (see paragraph A64–A68), the entity shall disclose in the notes to the Financial
Report:
(a) In the case of cash donations and grants, the amount of the grant or donation and the amount for
which the conditions have not been fulfilled;
(b) In the case of significant donated assets, details of the donated assets and, if recorded, the amount
of the donated assets; and
(c) A description of the purpose and nature of the conditions of the grant or donation.
Goods or Services in Kind Provided to the Entity
A189. An entity shall disclose in the notes to the Financial Report a description of any significant goods or
services in kind provided to the entity during the financial year, such as free professional services. A
Khmer Riel quantification may be provided as an optional disclosure.
Property, Plant and Equipment
A190. For each class of property, plant and equipment recorded in the statement of financial position, the entity
shall disclose in the notes to the Financial Report:
(a) A description of the asset class (for example, equipment, furniture);
(b) The carrying amount of the asset class at the beginning of the financial year;
(c) The depreciation and/or impairment expense recorded for the asset class for the financial year; and
(d) The carrying amount of the asset class at the end of the financial year.
A191. The entity shall disclose the source and date of the valuation of assets for any assets recorded at valuation
(such as significant donated assets) and any other assets for which the entity has chosen to disclose a
current value (see paragraphs A114–A116).
Significant Donated Assets Not Recorded
A192. Where significant donated assets have not been recorded in the statement of financial position because
values are not readily obtainable (see paragraph A113), the entity shall disclose in the notes to the
Financial Report a description of the asset, categorised by class where appropriate.
Significant Heritage Assets Not Recorded
A193. Where significant heritage assets have not been recorded in the statement of financial position because
values are not readily obtainable (see paragraph A111), the entity shall disclose in the notes to the
Financial Report, a description of the asset, categorised by class where appropriate.

36
Assets Used as Security for Liabilities
A194. If an entity has used any of its assets as security for loans borrowed, the entity shall disclose in the notes
to the Financial Report information about:
(a) The nature and amount of the loan that is secured; and
(b) The nature and amount of the asset(s) used as security.
Assets Held on Behalf of Others
A195. Where an entity is acting on behalf of another entity as its trustee, nominee or agent, the following
matters shall be disclosed in the notes to the Financial Report:
(a) A description of the assets which it holds in this capacity; and
(b) The name of the entity on whose behalf the assets are held.
Changes in Accumulated Funds
A196. The notes to the Financial Report shall include an explanation of the movements between the opening
and closing balances of all categories of Accumulated Funds. An entity shall also disclose the nature and
purpose of each reserve.
Commitments
A197. Commitments are legal obligations to make payments in the future. Although commitments (operating or
capital) are not yet recorded as liabilities, reporting them is essential for users of reports to gain a proper
understanding of the entity’s future viability.
A198. An entity shall report in the notes to the Financial Report the timing and estimated amount of any
significant commitments (both operating and capital). Types of commitments which may need to be
reported include:
(a) Commitments to lease or rent assets;
(b) Commitments to purchase property, plant and equipment; and
(c) Commitments to provide loans or grants.
Contingent Liabilities
A199. A contingent liability is a possible obligation that arises from past events that is contingent (dependent)
on some future event. For example, a court case not yet settled, or a guarantee issued.
A200. For each class of contingent liability at the reporting date an entity shall disclose in the notes to
the Financial Report:
(a) A brief description of the nature of the contingent liability;
(b) A best estimate of the amount of the contingent liability (where this can be estimated);
(c) An indication of the uncertainties relating to the amount or timing of any outflow of resources; and
(d) The possibility of any reimbursement.
A201. For each guarantee or class of guarantee, an entity shall disclose in the notes to the Financial Report:
(a) The nature of the guarantee;
(b) The maximum amount of any guarantees provided to others; and
(c) The likelihood of the entity being required to make payment under the guarantee.
Related Party Transactions
Explanation
A202. A related party transaction is a transfer of money or other resource between the reporting entity and a
person or other entity that is closely associated with the reporting entity that has the ability to influence
the reporting entity. This includes significant normal business transactions as well as significant
37
 transactions below market price (including the provision of free goods or services).

A203. Related parties comprise:

(a) People that have significant influence over the entity (such as officeholders, committee members,
or others that are involved in the strategic management of the entity – whether employed or
volunteer), and close members of their families; and
(b) Other entities that have significant influence over the entity.
A204. Related party relationships exist throughout the NFPE sector. Disclosure of related party relationships
and related party transactions and the relationship underlying those transactions is necessary for
accountability purposes, and to enable users to better understand the entity’s Financial Report. This is
because:
(a) Related party relationships can influence the way in which an entity operates with other entities;
(b) Related party relationships might expose an entity to risks, or provide opportunities that would not
have existed in the absence of that relationship; and
(c) Related parties may enter into transactions that unrelated parties would not enter into, or may
agree to transactions on terms and conditions that differ from those that would normally be
available to unrelated parties.
A205. Examples of transactions with a related party that would meet these criteria and therefore would be
disclosed are:
(a) The sale of a significant resource (such as a building) to the spouse of a member of the governing
body of the entity;
(b) The provision of preferential access to services provided by the entity to the child of the president
of the entity;
(c) The provision of finance (including loans, grants and guarantees), for example, a low interest
loan, to a related party; and
(d) A member of the governing body providing professional services (for example, accounting or
legal services) to the entity at no cost.
Requirements
A206. An entity shall disclose in the notes to the Financial Report, transactions with a related party that have
occurred during the financial year if:
(a) The transaction is significant to the entity (individually or in aggregate with similar transactions);
or
(b) The transaction (either significant or insignificant) is on terms and conditions that are likely to be
different from the terms and conditions of transactions in similar circumstances between parties
that are not related.
A207. For each disclosed transaction the following shall be reported:
(a) A description of the related party relationship;
(b) A description and amount of any revenue or expense (and the value of free goods or services
provided) related to the transaction during the financial year; and
(c) Any amounts due from or to related parties at reporting date.

A208. Not-for-profit public benefit entities shall separate the consolidate of financial statement and interest in
other entities as follows:
(a) The entities shall presentation of financial report of subsidiary, associate and other related entities
(Disclose amount of investment and gain/loss on investment with supporting documents)
(b) The entities shall presentation of financial reports of join venture or cooperate partner

38
Events After the Reporting date
A209. Where events after reporting date occur (see paragraphs A33–A35), and those events have a
significant impact on the information included in the Financial Report, the entity shall report in the
notes to the Financial Report the following:
(a) The nature of the event; and
(b) An estimate of its financial effect, or a statement that such an estimate cannot be made; and
(c) The effect, if any, on the entity’s ability to continue operating.

A210. An entity is not required to provide comparative information for events occurring after the reporting
date.
That is, an entity is not required to repeat disclosure of events occurring after the previous reporting date.
Ability to Continue Operating
A211. Where the entity plans to stop operating within 12 months from reporting date (see paragraph A176), or
it is likely that the entity will be unable to continue operating, the entity shall include in the notes to
the Financial Report the following:
(a) A statement that the entity intends to stop operating or that it is unlikely the entity will be able to
continue operating;
(b) The reason why the entity intends to stop operating or why it may not be able to continue
operating; and
(c) The estimated effect of the entity’s circumstances on the amounts of the entity’s assets and
liabilities.
A212. The impact of such a change will depend upon the particular circumstances of the entity. For example,
the impact on the recorded amounts of assets will depend upon whether operations are to be transferred
to another entity, sold, or liquidated. Judgement is required in determining whether a change in the
carrying amount of assets and liabilities is required. It is also necessary to consider whether the
change in circumstances leads to additional liabilities or triggers clauses in debt contracts which will
lead to the reclassification of those debts as current liabilities.
Correction of Errors
A213. When an entity corrects a significant prior period error (see paragraph A28), it shall report in the notes to
the Financial Report:
(a) A description of the error and how it was corrected; and
(b) The line items and amounts that have been corrected.
Additional Information
A214. The notes to the Financial Report shall include any additional information that the entity considers
necessary for users to understand the overall financial performance and position of the entity.
Optional Information
A215. An entity may include in the notes to the Financial Report:
(a) Breakdowns of the minimum categories, or the disaggregated categories or additional categories
reported in the statement of service performance, statement of financial performance, statement of
financial position or statement of cash flows;
(b) Additional information about donations, fundraising and other similar revenue including a list of
donors; and
(c) Other information that the entity considers will be helpful to users in understanding the
performance of the entity.

39
Section 10: Glossary
This glossary contains all terms defined in this Standard.

Accounting policies The specific policies and practices used by the entity when preparing
the Financial Report.
Accumulated funds The owners’ or members’ financial interest in the entity. It comprises capital
contributed by owners or members, accumulated surpluses or deficits, and reserves.
It also represents the difference between the assets and liabilities of the entity. In
the for-profit sector the equivalent term is equity.
Assets Resources controlled by the entity as a result of past events (which would usually
be transactions), from which future economic benefits are expected to flow to the
entity (such as investments producing interest revenue).
Associate An entity, including an unincorporated entity such as a partnership, over which
the investor has significant influence, and that is neither a controlled entity nor an
interest in a joint venture.
Bad debt Money owing to the entity (accounts receivable) that is deemed uncollectible and
written off as an expense. This may be due to the length of time it has been owing,
or information known about the customer’s ability to pay (for example, the
customer has gone into liquidation).
Reporting date The date to which the Financial Report is prepared. It is usually an end of month
date, for example, 31 December 20XX.
Carrying amount The cost of the asset less accumulated depreciation and accumulated
impairment losses (if any).
Commitments Contracts or similar arrangements entered into by the entity to pay money in
the future.
Consolidated The Financial Report of an economic entity presented as that of a single entity.
Financial Report
Contingent liability A possible obligation to pay money that will be confirmed by the occurrence or
non- occurrence of an uncertain future event or an obligation that has arisen but is
not recorded because: (i) it is not probable that the entity will have to settle the
obligation; or (ii) the amount of the obligation cannot be estimated reliably (that is,
the entity is too uncertain of the amount of the obligation).
Control The power to govern the financial and operating policies of another entity so as
to benefit from its activities.
Controlled entity An entity, including an unincorporated entity such as a partnership, which is
under the control of another entity (known as the controlling entity).
Controlling entity An entity that has one or more controlled entities.
Deficit The amount in the statement of financial performance when expenses
exceed revenue for the year. In the for-profit sector the equivalent term is
loss.
Depreciation The allocation of the cost of the asset over its useful life using a structured
method such as straight line or diminishing value.
Economic entity A group of entities comprising a controlling entity and one or more controlled
entities.

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Entity An entity is an organisation which may take any of a number of forms, including
but not limited to, registered charity, company, incorporated association,
unincorporated association or trust. Dependent on organisational structure, this
may be a legal entity, a unit within a wider organisation, or it may be comprised of
one or more units.
Expenses All outflows from the entity during the year other than capital outflows. Capital
outflows comprise distributions to owners (in their capacity as owners), outflows
to settle liabilities that were recorded in a previous year, and outflows to purchase
assets. Expenses include cash paid out during the year, and any liability to pay out
cash in the future related to an event (usually a transaction) in the current year or a
prior year. These outflows may be from normal operating activities such as the
costs of fundraising, or from transactions such as grants made by the entity.
Expenses also include reductions in property, plant and equipment called
depreciation expense and impairment expense.
Fair value The amount for an arm’s length transaction if it takes place between two willing
parties in the market. Fair value applies to both assets and liabilities.
Financial year A twelve month period ending on the entity’s reporting date.
Impairment When an asset is worth less in the market than the carrying amount in the statement
of financial position, the difference is an impairment (and is recorded as an
expense). This may occur if the asset becomes obsolete due to technological
change or the asset is damaged. Impairment tests apply to both tangible and
intangible assets.
Intangible assets Assets without a physical presence (for example, trademarks, patents).
Inventory Also referred to as stock, these are current assets held for sale in the ordinary
course of business. For example, the goods for sale in a charity shop.
Joint control The agreed sharing of control over an activity by a binding arrangement.
Joint venture A binding arrangement whereby two or more parties are committed to undertake
an activity that is subject to joint control.
Liabilities Present obligations arising from past events, the settlement of which is expected to
result in an outflow of resources from the entity. An example is the purchase of
supplies prior to reporting date, with the payment due in the next financial year.
Measurement Quantification of activities in terms of money, being Cambodian Khmer Riels.
Not-for-profit A public benefit entity that is not a public sector public benefit entity.
public benefit entity

Notes to the Notes that provide further information on items in the various financial
Financial Report statements, either by a further breakdown of figures or a narrative description.
Outcomes What the entity is seeking to achieve in terms of its impact on society.
Outputs The goods or services that the entity delivered during the year.
Financial Report A set of statements which collectively tell the story of the entity over the financial
year. This includes the entity information, statement of service performance,
statement of financial performance, statement of financial position, statement of
cash flows, statement of accounting policies, and notes to the Financial Report
prepared in accordance with this Standard.
Public benefit entity Reporting entities whose primary objective is to provide goods or services for
community or social benefit and where any equity has been provided with a view
to supporting that primary objective rather than for a financial return to equity
holders.

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Recording Including an output, outcome, revenue, expense, asset or liability in the

statements of the Financial Report (also referred to as recognition).

Recognition event An event that brings about the legal obligation for the entity to:
(a) Settle a transaction with another party at a future date (payables), or by the
payment of cash; or
(b) Have a legal obligation settled upon the entity by another party (receivables),
or by the receipt of cash.
This is what distinguishes accrual accounting from cash accounting (for which
the only recognition event is the receipt or payment of cash).
Related parties People or entities that have significant influence over the reporting entity, such
as officeholders, committee members, or others that are involved in the strategic
management of the entity (whether employed or volunteer) and close members
of their families.
Reporting entity An entity preparing a Financial Report in accordance with this Standard. In the
Cambodian reporting environment it is an organisation that is required by law, or
elects to apply, standards issued by National Accounting Council. For the purposes
of applying this Standard the entity is a NFP entity.

Revenue All inflows into the entity during the year other than capital inflows. Revenue
includes the cash received during the year, and the right to receive a payment in
the future related to an event (usually a transaction) in the current year. These
inflows may be from normal operating activities such as the sale of a good or
service. Capital inflows comprise contributions from owners (in their capacity as
owners), inflows to settle a receivable that was recorded in the previous year,
inflows from the sale of assets, and inflows from borrowings.
Significant An item is significant if recording and/or disclosure of the particular item,
whether financial or non-financial, could influence a user’s understanding of the
entity’s overall performance. For the purposes of this Standard it has the same
meaning as material.
Significant influence The power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
Statement of cash flows A statement that shows the movements between the cash balances at the
beginning and the end of the year. It is divided into two categories: operating,
and investing and financing.
Statement of financial A statement that shows an entity’s revenue and expenses, to establish its surplus
performance or deficit for the financial year. This statement is sometimes called the income
statement or operating statement.
Statement of financial A statement that reports a picture of the entity’s position by listing what it owns
position and what it owes at the reporting date. This statement is sometimes called the
balance sheet.
Statement of A statement that provides information on the outputs delivered by the entity
service during the financial year, and the outcomes those outputs contribute to. It is
performance particularly useful in the not-for-profit sector when the focus is on achieving
outcomes, rather than making a profit. The information in this statement is
predominantly non- financial, but still involves measurement.
Surplus The amount in the statement of financial performance when revenue
exceeds expenses for the year. In the for-profit sector the equivalent term is
profit.

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Appendix B: Transitional Arrangements

This Appendix contains the requirements for entities to transition to Cambodian Financial Reporting
Standard for Not-For-Profit Entities (CFRS for NFPES). It is an integral part of the Standard.
Objective
B1. This part of the Standard is designed to assist an entity in preparing its first Financial Report under this
Standard. This Standard recognises that entities come from divergent reporting backgrounds and prescribes
different transitional rules to meet different circumstances.
Transitional Groups
B2. There are likely to be two groups of entities applying this standard:
Group 1: New entities – those that have started up in the current financial year, and
Group 2: Continuing Entities – entities are previously applying different accounting frameworks.

General Provisions

B3. These general provisions apply to all entities in Groups 1 to 2 applying this Standard unless there is an
override in the Special Provisions in paragraphs B7 to B9.
B4. An entity that is reporting in accordance with this Standard for the first time, shall apply this Standard from
the beginning of the earliest comparative period presented. This is the financial year prior to that for which the
performance report is currently being prepared.
B5. All assets and liabilities shall be recorded at the beginning of the earliest comparative period
presented.
(a) For payables and receivables, amounts shall be recorded at the amount owing or owed at the beginning
of the earliest comparative period.
(b) For property, plant and equipment, an entity shall record significant items at their readily obtainable
current amounts (such as rateable value or government valuation). Where amounts are not readily
obtainable the entity is not required to record the assets but shall disclose this fact in the notes to the
performance report. An entity is not required to record insignificant items of property, plant and equipment.
(c) For other assets and liabilities an entity shall make its best estimate of the value at the beginning of the
earliest comparative period presented and record the assets and liabilities at that amount. In this case
accumulated funds is the number needed to make the statement of financial position balance on transition.

B6. Separate disclosure of significant restatements is encouraged, but is not required.

Group 1: New Entities

B7. No comparative figures are required for this Group. This overrides any requirement elsewhere in this
Standard for comparatives to be reported. New entities shall disclose their date of commencement in the
notes to the financial report.

Group2: Continuing Entities

B8. The continuing entities are those existing entities and have been operational in previous years and have different
accounting frameworks including CFRS for NFPEs Tier 1, CAS, CFRS for SMEs and full CFRS.

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Basis for Conclusions

BC1. This Basis for Conclusions summarizes the considerations of National Accounting Council (NAC) in
developing the Cambodian Financial Reporting Standard for Not-For-Profit Entities (CFRS for
NFPEs Tire 2).
Background

BC2. The CFRS is important elements for Not-For-Profit Entities (NFPE) work program. The CFRS for
NFPEs is developed under accrual-based accounting issued by NAC following by Ministry of
Economy and Finance’s working group on researching and drafting accounting standards for Not-For-
Profit Entities where appropriate to apply for NFPE permitted by laws and regulations of Kingdom of
Cambodia.
Objective
BC3. (CFRS for NFPEs) is intended to improve the quality and consistency of financial reporting by entities
eligible to apply the Standard.
BC4. (CFRS for NFPEs) is intended to provide a simplified version of the Tier 1 and Tier 2, rather than a
standard based on a different conceptual framework. As a result, NAC approached the development
of the Standard with a view that, in principle, the same recognition and measurement requirements
should apply to Tier 2 NFPEs financial reporting as are applied by entities applying the Tier 1 and
Tier 2. NAC also considered the extent to which the cost of applying the recognition and
measurement requirements in the outweighed the benefits to users of the resulting financial statements.
Approach
BC5. In preparing the Standard, the NAC was cognisant of the fact that some Tier 2 not-for-profit preparers, as
well as users of their Financial Report, may have limited access to professional accounting expertise.
NAC was of the view that the Standard should be able to be applied by persons who are managing the
finances of an entity that is eligible to apply (CFRS for NFPEs).

BC6. NAC decided that (CFRS for NFPEs) should be a single, short, and relatively simple standard written
in less technical language than is normally found in accounting standards. As a result, the
Standard:
(a) Addresses only those transactions that are commonly undertaken by entities eligible to apply
(CFRS for NFPEs);
(b) Contains simplified measurement of transactions where, taking the not-for-profit sector as a
whole, the costs of applying the requirements of Tier 1 and Tier 2 standards are likely to outweigh
the benefits;
(c) Excludes the options contained in Tier 1 and Tier 2 standards such as the option to measure
property, plant and equipment using the revaluation model; and
(d) Contains simplified presentation and disclosure requirements.
Omitted Transactions
BC7. The CFRS for NFPEs relied heavily on research funded by the then Charities Commission to assist it in
identifying transactions which were undertaken very infrequently by charities and therefore did not need
to be addressed in this Standard. These transactions include:
(a) Financial instruments other than payables, receivables and term deposits; and
(b) Complex transactions such as service concession arrangements and insurance contracts.
Simplifications
BC8. The major simplifications in this Standard compared to the Tier 1 and Tier 2 (CFRS for NFPEs) are as
follows:
(a) Whether grants or donations are recorded: Goods or services (and other non-cash assets)
received in kind are not required to be recorded;

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(b) Timing of recognition: Bequests of cash or significant assets are recorded on receipt rather than
when the definition of an asset is met (which might be earlier than receipt); and
(c) Treatment of donation/grant revenue: Donations and grants (and other fundraising revenue) are
recorded as revenue when received unless there is a “use or return” condition attached to the
revenue. In this Standard the key element that drives recognition of a liability relating to the
donation/grant received is the “use or return” condition.
BC9. The NAC decided that the simplification in BC8(a) should not apply to significant donated assets,
such as property. Any such donated assets are required to be recognised at a readily available current
value (rather than requiring measurement at fair value as defined in the Tier 1 and Tier 2 CFRS for
NFPEs). This is to ensure that the statement of financial position includes all significant assets
regardless of whether they are purchased or donated.
BC10. The simplification set out in BC8(a) has the consequence that information about donated goods, services
and assets (other than significant donated assets), including services provided by volunteers, will not be
recorded in the Financial Report. To compensate for this, (CFRS for NFPEs) requires disclosure of
significant donations in kind in the notes to the Financial Report.
BC11. In relation to the simplification set out in BC8(c) the NAC choses apply to grants and donations the
principles in IAS 20 Accounting for Grants and Disclosure of Government Assistance.
BC12. The NAC made a number of other simplifications in order to reduce the amount of professional
judgement required and to make the Standard simpler to apply Those simplifications include the
following:
(a) Financial instruments are measured at amounts receivable or payable, with interest revenue or
expense recognised in accordance with the terms of the contract, rather than by applying the
effective interest method;
(b) Any foreign currency transactions are to be translated using the rate at the transaction date or at
the balance sheet date for monetary assets and liabilities;
(c) Tax expense (where relevant) is based on income tax payable without any allowance for deferred
tax assets or deferred tax liabilities;
(d) Basing the statement of cash flows on ‘cash’ rather than cash equivalents; and
(e) Allowing the direct method of preparing the statement of cash flows, on the assumption that most
entities applying this Standard will use cash books as their primary source of information.
Option to Apply the Requirements in Tier 2 (CFRS for NFPEs)
BC13. The NAC is aware that some entities may prefer not to apply certain of these simplifications or may
wish to use an option that is available in Tier 1 and Tier 2 (CFRS for NFPEs). Accordingly, the NAC
included an option in this Standard that permits entities to elect to use the recognition and
measurement requirements of a Tier 2 (CFRS for NFPEs) Accounting Standard for a specific type of
transaction as long as the entity applies that same requirement to all transactions of that type.
Entities are required to disclose the use of this option, where applied.
Financial Information
BC14. This Standard establishes minimum aggregated categories for the reporting of financial information. It
also allows an entity to add additional categories applicable to that entity and to describe all categories
using terminology appropriate to that entity. In doing so, the NAC was seeking to achieve a balance
between comparability and understandability on the one hand, and flexibility for entities to reflect their
own circumstances on the other.

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Non-Financial Information
BC15. To enhance financial reporting with non-financial information that explains the activities of the entity,
this Standard requires:
(a) Disclosure of information about the entity’s structure and objectives, together with disclosure of
the entity’s reliance on donations, including services donated by volunteers; and
(b) The preparation of a statement of service performance.
BC16. The NAC is of the view that the reporting of this non-financial information is necessary for users to
gain a full understanding of the entity’s performance.

Related Parties
BC17. The definition of related party in existing accounting practice includes both people (and close members of
their families) and other entities that have significant influence over the entity. The NAC considered
whether to simplify that definition of related party for this Tier. After considering the importance of
related party disclosures for accountability purposes, and the risks and opportunities inherent in these
relationships, the NAC decided to retain in the definition of related party both related people (and
close members of their families) and other entities that have significant influence over the entity.
BC18. However, disclosure of related party transactions is only required if the transaction is significant to the
entity (individually or in aggregate with similar transactions), or the transaction is on terms and conditions
that are likely to be different from the terms and conditions of transactions in similar circumstances
between parties that are not related.
Transition

BC19. CFRS for NFPEs was aware that a wide range of pre-existing accounting policies were applied by entities
that are now required by law to follow standards issued by the NAC. The CFRS for NFPEs was also
concerned that some of those entities might have difficulty in restating their comparative information
and measuring some existing purchased assets as required by this Standard. Rather than delay the
application of the Standard, CFRS for NFPEs permits entities to:
(a) Apply CFRS for NFPEs in the first year without restating the comparative information. Entities
taking this option are required to attach their prior period financial statements (including an
explanation of the accounting policies applied) rather than having to restate the comparative
financial information; and
(b) Record only pre-existing assets that are significant and that have values that are readily obtainable.
Assets that are not significant or for which values are not readily obtainable need only be
disclosed in the notes to the Financial Report. NAC concluded that disclosing reliable information
about purchased pre-existing assets was sufficiently useful to users of financial statements
rather than imposing the costs on entities to attempt to identify, recognise and measure