ICAI’s Technical Guide on Accounting for NPOs

The Technical Guide on Accounting for Not-for-Profit Organizations (NPOs), issued by the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI), provides comprehensive guidance on the accounting practices and financial statement preparation for NPOs. The guide has been revised in 2023 to address specific accounting issues, update accounting treatments and incorporate relevant accounting standards developments since the last edition. The objective of the guide is to improve the accounting function within the NPO sector by explaining the accounting treatment of key elements such as income, expenses, assets and liabilities, in accordance with the applicable Accounting Standards.

Significance of Guide on Accounting for Not-for-Profit Organisations (NPOs)

The ICAI’s Technical Guide on Accounting for NPOs is highly valuable in enhancing the accounting practices within the NPO sector. It has received significant acclaim for its contributions to the sector. The guide not only offers guidance on accounting issues but also provides illustrative formats for the preparation and presentation of financial statements by NPOs.

ICAI's Technical Guide on Accounting for Not-for-Profit Organisations (NPOs) 2023

Need for Revised Technical Guide

The introduction of the Framework for Social Stock Exchange by the Securities and Exchange Board of India (SEBI) has made it necessary to prescribe comprehensive accounting guidance for NPOs, including the applicability of Accounting Standards. The revised Technical Guide addresses this need by recommending updated accounting treatments and provisions of Accounting Standards. Additionally, the formats of financial statements have also been reviewed and updated to ensure comparability among financial statements prepared by NPOs.

Global Developments and International Non-Profit Accounting Guidance (INPAG)

Globally, there is a growing focus on improving transparency, consistency, comparability, credibility and reliability of NPOs’ financial statements. To achieve this, the Chartered Institute of Public Finance and Accountancy (CIPFA) and Humentum have initiated the formulation of the International Non-Profit Accounting Guidance (INPAG). This initiative aims to provide international standards for non-profit accounting. In light of these global developments and the need for improved standards, the ASB of the ICAI has deemed it appropriate to thoroughly review and revise the Technical Guide on Accounting for Not-for-Profit Organisations.

Importance of Accurate Financial Statements for NPOs

Furthermore, recent amendments in the Income Tax regulations mandate that charitable or religious trusts, institutions, universities and other educational institutions submit audit reports in prescribed forms. In compliance with these regulations, it is crucial that the financial statements of these entities in the NPO sector are prepared accurately to provide a true and fair view of their financial position. Therefore, the ASB has also reviewed the Formats of Financial Statements for the NPO sector as provided in the Technical Guide to ensure their alignment with the amendments in the Income Tax regulations.

Objective of the ICAI’s Technical Guide

The primary objective of the Technical Guide on Accounting for NPOs by the ICAI is to recommend uniform accounting principles in accordance with the Accounting Standards and other generally accepted accounting principles in India. The guide aims to assist NPOs in the preparation and presentation of financial statements that meet the common information needs of various stakeholders. It emphasizes the application of sound accounting principles for the recognition, measurement, presentation and disclosure of income, expenses, assets and liabilities in the financial statements of NPOs while considering the specific characteristics of their activities. Additionally, the guide provides recommended formats for financial statements, taking into account the not-for-profit nature of these entities.

Scope of the Technical Guide

The Technical Guide is applicable to all NPOs in India, regardless of their legal form (trust, society or other) or category (community-based, national or international). However, certain NPOs may be subject to separate pronouncements or formats issued by relevant statutes, regulators, authorities or the ICAI for specific NPOs such as Trusts under the Maharashtra Public Trust Rules, 1951, schools and political parties. While these NPOs are encouraged to follow the Technical Guide, any contradictory pronouncements or formats should take precedence.

It’s important to note that the Technical Guide does not encompass the requirements of various acts, including the Income-tax Act and the Foreign Contribution (Regulation) Act. These acts have their own provisions and guidelines that are not covered in this guide.

For reporting purposes, the NPO itself is considered the reporting entity. If an NPO has multiple programs, projects, branch offices or sources of funds, it may maintain separate accounts for each entity for convenience and transparency. However, when preparing and reporting financial statements, the accounts of all activities, projects, branches and funding sources should be consolidated into the financial statements of the NPO as a whole.


The revised Technical Guide on Accounting for Not-for-Profit Organisations by the ASB of ICAI provides comprehensive guidance for NPOs in India. It aims to ensure uniform accounting principles, enhance the accuracy of financial statements and meet the information needs of stakeholders. By following the guide’s recommendations and utilizing the prescribed formats, NPOs can improve their accounting practices and financial reporting, contributing to greater transparency and credibility in the sector.

ICAI’s Technical Guide on Accounting for NPOs (2023)

ICAI’s Illustrative formats for Financial Statements of NPOs (2023) in Excel File

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