As the non-profit sector prepares for the first global financial reporting standard designed specifically for NPOs, finance leaders face a fundamental shift in how they demonstrate impact and accountability.
Risper Ouso, head of finance at Jacaranda Health, explains why implementation is long overdue.
What gaps in current non-profit financial reporting is INPAS designed to address, and why has its introduction become necessary now?
The NPO sector has not had a financial reporting standard that speaks specifically to its unique financial framework. Many NPOs use IFRS for SMES and IPSAS, others use cash basis and none have been sufficient for the sector’s unique needs; fund accounting, narrative reporting, and restricted funding.
At the recent INPAS workshop held by ICPAK in December 2025, CFOs, accountants and other experts had common alignment on what’s needed; consistent, comparable, complete and timely financial reporting that reduces complexity and improves clarity and trust for stakeholders. INPAS is the standard that will cure the heavy burden on recipients of multiple donor reporting formats.
INPAS was issued in October 2025 after a six year wait. Its implementation is long overdue; regulatory compliance by donors, governments and public is on the rise, and the sector has grown in size and complexities. Donors, regulators and recipients need the right tools to assess credibility, impact, performance and compliance. Imagine a harmonised story telling of impact through numbers.
Beyond new terminology and formats, where will CFOs experience the most practical impact of INPAS in day-to-day financial management and reporting?
INPAS is principles based. CFOs must shift from reporting what happened to how resources were used to drive impact. Effective grant reporting starts with budgeting so CFOs will need to review their budget templates, systems, controls and documentation. Narrative reporting will become the CFO’s responsibility unlike now where financial reports and programme/project reports sit differently. I see finance and CFOs working more closely with the programme operations because how else will CFO’s become storytellers of financial stewardship? CFOs will contribute more to annual reports, link financial results to purpose, clearly link expenditure to programmes, activities and more importantly to outcomes. I chose to call it harmonised storytelling through numbers.
The NPO revenue landscape varies; those with delivery obligations, restricted, unrestricted and for some NPOs, in-kind donations. CFOs must analyse each revenue source, understand the conditions including when to recognise revenue. This means more upfront review of grant and donor agreements and more intentional collaboration with the programmes, finance, and fundraising teams. Some CFOs might need to update their chart of accounts for better tracking of restricted and unrestricted funding. Boards, donors, internal leadership and other stakeholders will be asking more questions and demanding more accountability. CFOs must map the different audiences and provide timely, complete and accurate information; less compliance reporting but more strategic insights.
From what you are seeing in early workshops and discussions, how prepared are non-profits for INPAS adoption, and where are organisations most likely to underestimate the transition effort?
I have attended a few INPAS workshops, webinars, the online launch and the recent ICPAK workshop, and honestly, most CFOs are more aware than prepared. With the standard only issued in October, stakeholders are getting acquainted, downloading resources and appreciating the what, why, whom, when and how. In Kenya, there is good momentum from PBORA and ICPAK, both promising support to early adopters. We await an adoption framework from ICPAK in January. Bottom line, INPAS adoption will succeed where organisations start early, treat it as a behaviour change programme, not an accounting tweak and invest in judgement, systems, and governance education.
Questions that can help gauge readiness include; can we explain, grant by grant, why income is recognised when it is, using documented conditions not donor labels? Is the chart of accounts designed for INPAS logic or donor compliance? If not, comparatives will be very painful. Are judgements documented or only on people’s heads? Do programme managers understand that their reporting informs income recognition? Transition efforts will mostly be underestimated in time, judgement and behaviour change.
What new questions should board and senior leadership expect to engage with once INPAS is in place, and how can CFOs use the standard to elevate strategic financial conversations?
One question that will constantly come up given the current sector situation and following the 'death' of USAID, would be: How many months of operations could we sustain if no new funding were received? Sustainability has to become a strategic topic with CFOs ensuring that reporting for delivery obligated, restricted and unrestricted funding is accurate, complete and consistent.
Other questions could revolve around consequences on failure to meet funding conditions, what programmes rely on unrestricted funds, understanding full scope of delivering programmes. CFOs must educate stakeholders on INPAS by moving from donor reported numbers to clear illustration of how resources tie to obligations. CFOs must help leaders understand the why behind results, for instance, why income recognition differs from cash received. CFOs must help the board and leadership create clarity for accountability, risk and obligations.
Finally, CFOs must translate INPAS insights into strategy, answering how to use INPAS reporting to demonstrate credibility to donors and regulators.
For organisations weighing early engagement with INPAS against a wait-and-see approach, what are the key risks and advantages on both sides?
ICPAK announced early adoption starting January 2026 and it’s optional. Advantages to early adopters include early engagement with boards, donors and other key leaders on understanding INPAS for funding obligations, sustainability and risk, access to expert and regulator support, enhanced credibility and early learning ahead of mandatory adoption.
Risks include time and resource constraints from producing two reports; INPAS and existing donor templates, and resistance to change by staff and donors.
The wait-and-see approach appears to have advantages including timing flexibility and room to observe and learn, but risks outweigh advantages; rushed adoption due to insufficient time, funding risk due to slow INPAS readiness and appearing unattractive to donors in a sector already constrained.
What concrete steps should non-profit CFOs take over the next 12 to 18 months to position their organisations well for INPAS, even before formal adoption timelines are set?
CFOs should start simple, scale gradually, document everything and have parallel reporting while keeping stakeholders posted on INPAS implementation plans. In the first 3 months, create awareness and understand the unique landscape of the NPO. In months 4 to 6, review, assess and update policies and chart of accounts for INPAS adoption. In months 7 to 12, configure INPAS into financial reporting, ensure education for internal teams is solid, and start using INPAS to improve strategic financial conversations ahead of the first INPAS report.
I like to use the 5Ws + H approach. CFOs should present initial INPAS reports clearly answering: What unrestricted funds are available? Why deferred income has changed? Who carries obligations and risks? When does funding commitment expire? Where are risks concentrated? How should strategy adjust? Purpose to understand what INPAS is in conjunction with the organisation’s nature, any organisation offering services and goods for public benefit will ultimately have to transition to INPAS.
