Financial reporting and valuation treatment of property assets by not-for-profit operators

The continued presence of not-for-profit (NFP) operators in the residential aged care (RAC) and retirement village industry in Australia adds to its complexity and diversity. This is an industry focused on the delivery of services through specialised property assets, which often have histories going back decades. NFP operators have greater flexibility in financial reporting when compared to for-profit operators, and the paper examines the accounting treatment and measurement of value in financial reporting of property assets by this group. Considerable diversity in classification and treatment of property assets was noted, plus a strong reliance on directors' valuations. Both RAC and retirement villages have been the subject of government inquiries at the Commonwealth and state levels, which have focused on the financial performance of the industry. The diversity in financial reporting has implications for the transparency of the financial performance of the industry.