To Depreciate or not to Depreciate Non-governmental Fixed Assets

Abstract

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 specifically in
the area 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 of business enterprises is to
carry out activities that will generate profit and subsequently increase the wealth of
owners of the business.

Keywords: Non-Governmental Organization (NGO), business enterprise, accounting principles, accounting standards, auditing, accountability.

Journal of Language, Technology & Entrepreneurship in Africa Vol. 1 (2) 2009: pp. 23-35