Introduction
NPOs, or non-profit organizations are economic entities whose main purpose of creation is to perform socially significant functions and programs. Making a profit for this category of organizations is not in the first place. Despite the special status, like other economic entities, non-profit organizations are required to submit reports on the results of their activities.
Reports NPOs Submit
Tax – these are forms that are intended for the Federal Tax Service. Insurance is information that discloses information about accrued and paid contributions in favor of insurance coverage of working citizens (Montesinos & Brusca, 2019). Statistical is the information of statistical reporting, which is systematically requested by territorial statistical bodies. Financial or accounting statements are data that disclose information about the financial position of an entity, the value of assets, and the amount of liabilities assumed, as well as characterizes the actual results of the organization’s activities. Analysis of reports of this category allows to make management decisions. It is this type of reporting that will be described in this paper.
Legal Regulation of Financial Reporting
The accountant of a non-profit organization should be guided by several regulatory legal acts when forming accounting financial statements. When applying the rules of legislative acts, one should keep in mind the peculiarities of non-profit organizations. Firstly, NPOs were created not to make a profit, but to achieve socially significant indicators. However, they can conduct business activities if it is required to achieve their goals. Secondly, non-profit enterprises do not have the right to distribute the received income (profit) among the participants, founders, and owners, but have to direct it to achieve their goals.
Features of Accounting and Formation of Accounting Statements
Non-profit institutions, like other organizations, are required to keep records following the established procedure. Business transactions reflecting the activities of the enterprise are subject to reflection in the primary documentation and registration logs. The formation of financial reports is based on accounting data. The specifics of accounting, annual accounting statements, and ways of forming and detailing the accounting records of NPOs should be reflected in the accounting policy (Montesinos & Brusca, 2019). Accounting in NPOs, as in other categories of organizations, is carried out exclusively in dollars. Even if the transaction was made in a foreign currency, it must be converted into dollars.
Composition and Structure of Reporting Forms
The regulatory legal act fixes six reporting forms that will have to be filled out at the end of the calendar year. The structure of the financial reporting of NGOs includes:
The balance sheet is the basis of the fundamentals of financial reporting. It is a key document reflecting the value expression of assets, capital, and liabilities of the entity. The form is divided into two parts: a liability and an asset. The active side of the balance sheet discloses information about the value of fixed assets, stocks, and financial instruments at the disposal of the company. The passive part of the balance sheet characterizes the sources of asset formation. It denotes the monetary expression of capital (authorized, additional, reserve), obligations assumed (accounts payable, borrowed capital), and so on. The key rule of the balance sheet is that an asset and a liability should be equal.
The financial results report is the second most important form of financial reporting. It reflects the actual performance of the company. The structure of the document provides for filling in indicators not only for the reporting period (year) but also for the two preceding ones (Montesinos & Brusca, 2019). This feature allows one to make a comparative analysis of the company’s activities by year.
The Capital Changes Report discloses information about all capital movements that occurred in the reporting period. The information is filled in in the context of economically significant indicators, based on accounting data, for the full financial year.
The cash flow statement details information about the movement of the company’s financial assets. The structure of the form provides for the possibility of conducting a comparative analysis of the indicators of the reporting period and previous years (two previous calendar years).
Report on The Targeted Use of Funds
The report on the targeted use of funds exposes information on the number of targeted receipts (subsidies, grants, and other funds), as well as data on their use. Moreover, information about the user is disclosed in the context of the target areas. It is filled in for the reporting and previous years.
Conclusion
The appendix to the balance sheet is an explanatory note, as well as a set of forms and tables that disclose individual indicators about the activities, structure, and property assets of the enterprise. An explanatory note is a textual description of the indicators of the reporting forms (Montesinos & Brusca, 2019). If there are any discrepancies in accounting, these circumstances should be disclosed in as much detail as possible in the explanatory note.
References
Montesinos, V., & Brusca, I. (2019). Non-financial reporting in the public sector: Alternatives, trends and opportunities. Revista De Contabilidad: Spanish Accounting Review, 22(2), 122-128.