Abstract:
Many non-profit entities set aside specific amounts of money received from third parties exclusively aimed at achieving a certain objective. The initial fund capital is generally kept intact and utilised to generate additional income for the fund and not distributed to any beneficiaries. Such a fund is referred to as a special purpose fund, distinguishing it from the general or equity fund of the non-profit entity. In accounting for the fund the argument exists that non-profit entities need not apply Statements of Generally Accepted Accounting Practice (GAAP) but merely their own generally accepted accounting practice. In terms of Circular 5/2003 issued by SAICA, as well as the legal opinion obtained by SAICA per Circular 8/1999, in order to meet the requirements of the Companies Act GAAP must be applied. Even if GAAP is not legally enforceable, the Framework for Preparation and Presentation of Financial Statements should be considered.
