Format of Financial statements of NPOs
The financial statements should give a true and fair view of the state of affairs of the NPOs, comply with the applicable Accounting Standards and shall be in the form as provided hereafter.
Part I – General Instructions for the preparation of Balance Sheet and Income and Expenditure Account of Not-For- Profit Organisations
These formats are recommended for preparation of Balance Sheet and Income and Expenditure Account of NPOs. Where compliance with the requirements of the relevant statute including Accounting Standards as applicable to the NPOs require any change in treatment or disclosure including addition, amendment, substitution or deletion in the head or sub-head or any changes, inter se, in the financial statements or statements forming part thereof, the same should be made and the formats should be modified accordingly.
The disclosure requirements recommended in the formats are in addition to and not in substitution of the disclosure requirements specified in the Accounting Standards issued by the Institute of Chartered Accountants of India. Additional disclosures specified in the Accounting Standards should be made in the notes to accounts or by way of additional statement unless required to be disclosed on the face of the Financial Statements. Similarly, all other disclosures as required by the relevant statute should be made in the notes to accounts in addition to the requirements set out in these formats.
The financial statements of NPOs (viz., balance sheet and income and expenditure account) should be prepared on an accrual basis.
A statement of all significant accounting policies adopted in the preparation and presentation of the balance sheet and the income and expenditure account should be included in the NPO’s balance sheet.
Accounting policies should be applied consistently from one financial year to the next. Any change in the accounting policies which has a material effect in the current period or which is reasonably expected to have a material effect in later periods should be disclosed. In case of a change in accounting policies which has a material effect in the current period, the amount by which any item in the financial statements is affected by such change, should also be disclosed to the extent ascertainable. Where such an amount is not ascertainable, wholly or in part, the fact should be indicated with reasons.
The accounting treatment and presentation in the balance sheet and the income and expenditure account of transactions and events should be governed by their substance and not merely by the legal form.
In determining the accounting treatment and manner of disclosure of an item in the balance sheet and/or the income and expenditure account, due consideration should be given to the materiality of the item.
(i) Notes to accounts may contain information in addition to that presented in the Financial Statements and may provide where required
(a) narrative descriptions or disaggregations of items recognised in those statements; and
(b) information about items that do not qualify for recognition in those statements.
(ii) Each item on the face of the Balance Sheet and Income and Expenditure Account should be cross-referenced to any related information in the notes to accounts. In preparing the Financial Statements including the notes to accounts, a balance should be maintained between providing excessive detail that may not assist users of financial statements and not providing important information as a result of too much aggregation.
(i) Depending upon the Gross Income of the Non-Company NPOs, the figures appearing in the Financial Statements may be rounded off as given below:—
Gross Income
Rounding off
(a) less than one hundred crore rupees
To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
(b) one hundred crore rupees or more
To the nearest lakhs, millions or crores, or decimals thereof.
(ii) Once a unit of measurement is used, it should be used uniformly in the Financial Statements.
Except in the case of the first Financial Statements prepared by the NPOs (after its incorporation) the corresponding amounts (comparatives) for the immediately preceding reporting period for all items shown in the Financial Statements including notes shall also be given.
For the purpose of this format, the terms used herein shall be as per the applicable Accounting Standards.
Note:—This part recommends the minimum requirements for disclosure on the face of the Balance Sheet, and the Income and Expenditure Account (and Notes. Line items, sub-line items and sub- totals shall be presented as an addition or substitution on the face of the Financial Statements when such presentation is relevant to an understanding of the NPOs financial position or performance or when required for compliance with the amendments to the relevant statutes or under the Accounting Standards.
A cash flow statement should be prepared, wherever applicable, showing cash flows during the period covered by the income and expenditure account and during the corresponding previous period.
Format of Financial Statements (Not for Profit Organisation) Name of Not-for-Profit Organisation
BALANCE SHEET AS AT
(figures in Rs….)
Notes
Figure as at the end of the current reporting period (DD/MM/YYYY)
Figure as at the end of the previous reporting period (DD/MM/YYYY)
I
SOURCES OF FUNDS
(1)
NPO FUNDS
UNRESTRICTED FUNDS
RESTRICTED FUNDS
(2)
NON-CURRENT LIABILITIES
Long-Term borrowings
Other Long-Term Liabilities
Long-Term Provisions
(3)
CURRENT LIABILITIES
Short Term
Borrowings
Payables
Other Current Liabilities
Short Term Provisions
TOTAL
II
APPLICATION OF FUNDS
(1)
NON-CURRENT ASSETS
Property, Plant and Equipment &
Intangible Assets
Property, Plant & Equipment
Intangible Assets
Capital Work in Progress
Intangible assets under Development
Long-Term Investments
Long-Term Loans and Advances
Other Long-Term Assets (specify
nature)
CURRENT ASSETS
Current Investments
Inventories
Receivables
Cash and bank balances
Short-term Loans & Advances
Other Current Assets
TOTAL
See accompanying notes which form part of the financial statements
Notes:
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET
An asset shall be classified as current when it satisfies any of the following criteria:
it is expected to be realized within twelve months after the reporting date; or
it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets shall be classified as non-current.
A liability shall be classified as current when it satisfies any of the following criteria:
it is due to be settled within twelve months after the reporting date; or
the NPO does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other liabilities shall be classified as non-current.
An NPO shall disclose the following in the Notes to Accounts:
Form of Income and Expenditure Account
Name of Not-for-Profit Organisation
INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED
Particulars
Figures for the current reporting period from ---
(DD/MM/YYY) to --- (DD/MM/YYY)
Figures for the previous reporting period from --- (DD/MM/YYY) to --- (DD/MM/YYY)
Unrestricted Funds
Restrict ed
Funds
Tota l
Unrestri cted
Funds
Restricted Funds
Total
I
INCOME
Donations and
Grants
Fees from
Rendering of services
Sale of goods
II
Other Income
III
Total Income
IV
EXPENDITURE
Materials consumed/ distributed Opening balance Add: Purchases
Less: Closing balance
Donation/contribu tion paid
Employee Benefit
Expense
Depreciation and amortization
expense
Finance Cost
Other Expenses
Religious/ charitable expenses (specify nature)
Others (specify nature)
Total Expenses
V
Excess of Income over Expenditure for the year before exceptional and
extraordinary items (III-IV)
VI
Exceptional items (specify nature and provide note/delete if
none)
VII
Excess of Income over Expenditure for the year before
extraordinary items (V-VI)
VIII
Extraordinary items (specify nature and provide note/delete if
none)
IX
Excess of Income
over Expenditure for the year (VII-
VIII)
Appropriations Transfers to funds, e.g., Building fund Transfers from
funds
Balance
transferred to General Fund
Part IV: GENERAL INSTRUCTIONS FOR PREPARATION OF INCOME AND EXPENDITURE Account
The income and expenditure account should disclose every material feature and should be so made out as to clearly disclose the result of the working of the NPO during the period covered by the account.
Donations and grants should be recognised only at a stage when there is a reasonable assurance that:
the NPO will comply with the conditions and obligations attached, and
the donations and grants will be received.
Depreciation should be provided so as to charge the depreciable amount of a depreciable asset over its useful life.
Fair value and quantitative details of items, being sold or being distributed free of cost or at nominal amount that have been received as non-monetary grants and donations, should be disclosed as, in the notes to accounts:
Balance at the beginning of the year Add: Receipts during the year
Less: Distribution during the year: Sale during the year Balance at the end of the year
Finance Costs shall be classified as:
Interest expense
Other borrowing costs;
Applicable net gain/loss on foreign currency transactions and translation
Other Income shall be classified as:
Interest Income;
Dividend Income;
Net gain/loss on sale of investments;
Other income (net of expenses directly attributable to such income).
Following shall be disclosed by way of notes regarding aggregate expenditure and income on the following items:
(i)
Any item of income or expenditure which exceeds 1 percent of the gross income of the NPO or Rs. 1,00,000/-, whichever is higher
Adjustments to the carrying amount of investments
Net gain or loss on foreign currency transaction and translation (other than considered as finance cost)
Details of items of exceptional and extraordinary nature;
Prior period items.
(ii) Expenditure incurred on each of the following items, separately for each item: