To depreciate or not to depreciate non governmental fixed assets Beth Wanjeri Mwangi

By: Publication details: Nairobi USIU 2009Description: 25-35pg. The Journal of Language, Technology and Entrepreneurship in Africa vol. 1 no.2ISSN:
  • 19981279
Subject(s):
Contents:
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Summary: In the last two decades Africa and particularly Kenya has experienced an exponential growth of Non-Governmental Organizations (NGOs). This is attributed to the fact that they are established to solve immediate humanitarian problems that result from war, famine,poverty and bad governance in most countries in Africa. Given the magnitude of the resultant social challenges, NGOs have in time grown to control immense amounts of financial resources. It is therefore pertinent that they not only account for their social activities but also for these financial resources. The focus of this discussion is on the accounting of these funds and specially in areas of depreciation. In an attempt to establish rules and regulations that ensure that NGOs account for their financial resources business accounting principles and standards have largely been prescribed for the accounting and auditing of NGOs. And this has been without due consideration of the significant differences between the nature of operation of NGOs and business enterprises. One of the major differences is that the core business of NGOs is to provide humanitarian services which are not measurable in monetary terms, while that business enterprises is to carry out activities that will generate profit and subsequently increase the wealth of owner of the business.
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In the last two decades Africa and particularly Kenya has experienced an exponential growth of Non-Governmental Organizations (NGOs). This is attributed to the fact that they are established to solve immediate humanitarian problems that result from war, famine,poverty and bad governance in most countries in Africa. Given the magnitude of the resultant social challenges, NGOs have in time grown to control immense amounts of financial resources. It is therefore pertinent that they not only account for their social activities but also for these financial resources.
The focus of this discussion is on the accounting of these funds and specially in areas of depreciation. In an attempt to establish rules and regulations that ensure that NGOs account for their financial resources business accounting principles and standards have largely been prescribed for the accounting and auditing of NGOs. And this has been without due consideration of the significant differences between the nature of operation of NGOs and business enterprises. One of the major differences is that the core business of NGOs is to provide humanitarian services which are not measurable in monetary terms, while that business enterprises is to carry out activities that will generate profit and subsequently increase the wealth of owner of the business.

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