NGO Accounting what you need to know
Posted by Silicon Cloud on Mon, Jan 17, 2011
NGO Accounting has standards
There are set standards for Non Government Organizational accounting. One of those is that accounts are maintained to ensure funds are properly utilized for the objectives of the organization. Contrary to a business who would want to see the profits at the end of the year and decide who gets what, NGO’s ares not permitted to declare profits, or distribute profits to proprietors and non profit accounting systems apparently are complicated.
When an audit report is prepared the words surplus or profits are insignificant. Neither are they, after all relative to this organization. Neither are things such as income tax or donors. Funding is typically set aside for a specific project and it shows on the balance sheet as having been reserved for that purpose. In cases where certain funds donated by a donor for a specific purpose such as education, the agreement is often such that the donor selects the department of education to which the funds are donated.
NGO Accounting and Donations
Donations for the NGO come from different sources such as corporations, individuals and trust groups. Donations are the contributing force, which enable NGO to discharge the financial objectives. NGO’s can be Trusts or Societies continuing to maintain their books on cash or hybrid basis. An NGO may also claim exemption of income from property held in trust. And the income tax requires that NGO’s be audited.
NGO Accounting requires to compliant
To be successful an NGO must be, punctilious in legal compliance, genuine in its enterprise clear in dealings and veritable in reporting. In other words it has to be a near to perfection society. The pressures from institutions and donor agencies that these organizations are subjected to, contribute to the complex accounting which its financial management concentrates more on spending than making money.
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