Characteristics Of Accounting System For Non-Profit Organizations

A few days ago, in the course of the formulation of the accounting system for non-profit organizations, the civil nonprofit organizations considered the organizational characteristics and business characteristics of the non-profit organizations. As far as they could learn from the international practices, the accounting system of the non-profit organizations in China not only took into account the national conditions of China, but also integrated with the international practice. The new system refers to the accounting method of enterprise accounting, for example, accounting is based on accrual basis, which requires non-profit organizations to calculate depreciation of fixed assets and carry out cost accounting, which helps non-governmental organizations to strengthen asset liability management and cost management and improve operational performance. Effectively compensate for the deficiency of the accounting system. Net asset also refers to the accounting treatment method of institution accounting system, but it is different. Compared with the old accounting system, the new system has the following 8 characteristics:

1, accounting objectives.

In view of the sources of funding for private nonprofit organizations main Donations from all sectors of society, membership fees paid, and service fees paid by service providers will meet the decision-making needs of donors, members, service providers, creditors, regulators and other accounting information users as the accounting objectives of non-profit organizations, and design their accounting statements and information that should be disclosed in financial accounting reports.

2, accounting basis.

The new system introduces the principle of accrual basis, so as to meet the requirements. nongovernmental Non profit organizations calculate depreciation of fixed assets. cost Accounting, etc., helps non-governmental non-profit organizations to strengthen asset liability management and cost management, improve operational performance, and effectively compensate for the lack of accounting system.

3, accounting elements.

The new system has set up five accounting elements: assets, liabilities, net assets, income and expenses. In view of the fact that resource providers of private non-profit organizations do not enjoy the ownership of the organization, nor do they get rewards from the organization, the private non-profit organizations do not have the problem of calculating "owners' equity" and "profit". Similarly, under accrual accounting, there is no problem of "expenditure" under the accounting receipts and payments system. Therefore, the system neither sets up the owners' equity and profit accounting elements in enterprise accounting, nor sets the expenditure accounting elements in budgetary accounting.

4, accounting measurement basis.

While adhering to the historical cost basis, the new system has introduced other fair measurement bases for some special transactions, such as donations and government subsidies. This is mainly due to the business characteristics of the non-profit organizations. Many of their assets have no actual costs, such as donated assets, government subsidized assets and so on. They are free of charge. If they are strictly in accordance with the actual cost principle, it will be difficult to confirm and measure, and it is difficult to achieve the true and complete purpose.

5. Accounting and reporting of net assets.

The new system divides the net assets of non-governmental non-profit organizations into two categories: restricted net assets and non restrictive net assets. The net assets are defined as net assets that are restricted by their time and / or use. Other net assets are non restrictive net assets, which can reflect the composition and nature of the net assets of non-profit organizations.

6. Confirmation of income.

Taking into account the particularity of non-profit sources of income, the new system divides the income of non-profit organizations into income derived from exchange transactions and non exchange transactions, and defines their affirmation criteria respectively for transactions recognized according to the principle of exchange of equal value, which are recognized and measured according to the recognition principle of exchange transactions, and are recognized and measured in accordance with the principle of recognition of non exchange transaction revenue, such as government subsidies and donations.

7. Classification of expenses.

Because the system stipulates that the accounting basis of NPOs is accrual basis, and the main function of the activity statement is to evaluate the performance of NPO. Therefore, the new system calls for the evaluation of non-profit organizations' performance in the accounting of expenses. Therefore, the new system calls for a strict distinction between the cost of business activities and the period costs in the accounting of expenses, including the management costs, financing costs and other expenses.

8. Contents and composition of financial accounting report.

According to the business characteristics of non-governmental non-profit organizations and the needs of users of accounting information, the system requires that the financial accounting reports of non-profit organizations should include at least three basic statements, such as balance sheets, business activities tables, cash flow statements, and notes to accounting statements.