What are the key financial reporting points to remember for non-profit organisations?

Introduction

Navigating the financial landscape for non-profit organisations in Ireland involves understanding legal requirements, financial statement obligations, reporting frequencies, auditing standards, and the potential penalties for non-compliance. In this comprehensive guide, we delve into the intricacies of financial reporting, shedding light on the essential elements that non-profits must adhere to in Ireland.

9 key financial reporting points to remember for non-profits.

1. Non-profit organisations (NPOs) in Ireland can take various legal forms, including unincorporated associations, trusts, and companies limited by guarantee. 
2. To qualify for charitable tax status, an NPO must be established for a charitable purpose that benefits the public, as defined in the Charities Act 2009.
3. Charities with annual income over €100,000 are required to have their financial statements audited. (This is expected to change to €250,000)
4. Small companies, including NPOs registered as companies, may qualify for audit exemption if they meet certain criteria.
5. All registered charities must submit annual reports, including financial statements, to the Charities Regulator. The financial statements should give a true and fair view of the charity’s finances.
6. There are no specific accounting standards for NPOs in Ireland. NPOs that are companies typically follow the accounting requirements in the Companies Act 2014. Some charities voluntarily follow the Charities SORP.
7. The main financial statements required are a statement of financial activities (SOFA), balance sheet, statement of cash flows, and notes. The SOFA should show incoming and outgoing resources by category.
8. NPOs are not required to use fund accounting but may choose to report restricted, unrestricted, endowment funds etc. separately.
9. The Charities Regulator can take action against charities that do not comply with financial reporting obligations. Penalties include fines, criminal prosecution, and removal from the Register of Charities.

Read More : Ensuring Compliance and Transparency in Charity Accounting with XERO in Ireland

Summary

Irish NPOs must comply with financial reporting requirements to maintain charitable status and avoid penalties. Following accounting standards helps demonstrate accountability and proper governance.