Original Research

Does the GAAP-shoe fit not-for-profit organisations or is it causing them blisters?

Cobus Rossouw
Journal of Economic and Financial Sciences | Vol 1, No 1 | a377 | DOI: https://doi.org/10.4102/jef.v1i1.377 | © 2018 Cobus Rossouw | This work is licensed under CC Attribution 4.0
Submitted: 02 July 2018 | Published: 30 April 2007

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Cobus Rossouw, University of the Free State

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Generally Accepted Accounting Practice (GAAP), which comprises International Financial Reporting Standards (IFRSs), has been designed to apply to the general purpose financial statements of all profit-oriented entities, and especially those competing in the international capital markets. On the other hand, not-for-profit organisations exhibit unique characteristics, different from businesses. The nature of not-for-profit organizations means that GAAP (IFRS) is not applicable to them. Small and medium entities (SMEs) and governmental institutions also exhibit unique characteristics and specific accounting standards were developed to meet their specific needs. In South Africa there are no accounting standards that specifically apply to not-for-profit organisations and that take their specific reporting needs into account. This article examines whether GAAP is applicable to not-for-profit organisations, and whether its application adds value to these organisations. The article focuses on the nature of not-for-profit organisations and its impact on accounting standards, discusses the applicability of GAAP and highlights some problems experienced when applying GAAP.


not-for-profit organisations; Generally Accepted Accounting Practice (GAAP); International Financial Reporting Standards (IFRSs); applicability; accounting; standards; problems


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1. Should NPOs Follow International Standards for Financial Reporting? A Multinational Study of Views
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