Instructions for compiling the annual financial statements of non-profit organizations are detailed in the Financial Operations and Accounting of Non-Profit Organizations Act.
That law prescribes the obligation to compile financial statements of non-profit organizations whose purpose is to provide an objective financial picture of the business. That is why, before the creation itself, it is necessary to take several steps related to the control and analysis of the data to confirm their truthfulness and credibility.
This Act applies to domestic and foreign associations and their alliances, foundations, foundations, institutions, art organizations, chambers, trade unions, employers’ associations and all other legal entities whose primary goal of establishment and operation is not the acquisition of profit. All non-profit organizations are obliged to prepare and submit annual financial statements, but the forms of financial statements differ depending on the way of bookkeeping. Below we present the instructions for compiling non-profit organizations’ annual financial statements.
Non-profit organizations accounting
One of the rules for non-profit organizations is that they must keep their bookkeeping according to the principle of double-entry bookkeeping. There are also exceptions in which the legal representative of a non-profit organization can make a Decision on keeping simple bookkeeping and applying the monetary accounting principle if:
- A non-profit organization’s valuable assets at the end of each of the previous three consecutive years are less than EUR 30.526,25 and
- A non-profit organization’s annual income in the previous three consecutive years is less than EUR 30.526,25 per year.
It is important to note that for the first three years after the non-profit organization’s establishment, there is an obligation to keep double-entry bookkeeping.
In non-profit organizations that maintain double-entry bookkeeping, financial statements differ in structure and scope from reports in simple bookkeeping. The Finance Ministry has issued an Instruction for the preparation and submission of financial statements of non-profit organizations for the period from January 1 to December 31, 2022, in which the differences they described in detail.
Reports in double bookkeeping
Those non-profit organizations that keep double-entry bookkeeping must prepare financial reports on the state and structure and changes in the value of assets, liabilities, own resources, expenses and income. Therefore, it is important to list what the annual financial statements made with double-entry bookkeeping consist of:
- Balance sheets on BIL-NPF Form,
- Income and expenditure reports on PR-RAS-NPF Forms and
- Notes.
Reports in simple bookkeeping
Non-profit organizations that keep simple bookkeeping prepare annual financial statements based on books of receipts and expenditures. Therefore, such non-profit organizations should compile:
- Financial yearly report on receipts and expenditures on Form G_PR-IZ-NPF and
- Notes.
Annual inventory of assets and liabilities
All non-profit organizations, whether they keep double-entry or single-entry bookkeeping, must conduct an annual list of assets and liabilities. This list carries the balance on the balance sheet date due to the accounting balance reconciliation with the real one. The census commission performs the census, and the date and deadlines for the census determine the legal representative. After the inventory, the committee draws up a report from which the legal representative decides on the procedures for identified surpluses and/or deficits.
Submission of annual financial statements and deadlines
Non-profit organizations compile half-yearly reports on income and expenses while they compile financial reports for the entire business year. Financial statements for the year 2022 they submit within 60 days from the end of the reporting period. More specifically, the deadline for submitting the report for 2022 is March 1, 2023. They submit reports to FINA in electronic form or via paper form.
