Croatian Government sent Final draft of Law on Financial operations and Accountancy of Non-Profit organisations to Parliament

Today the Government of the Republic Croatia passed the Final draft of Law on Financial operations and Accountancy of Non-Profit organisations to the Croatian Parliament.

By this draft, the framework of financial operations and elements of non-profit organisations' accounting system has been set up, containing principles of financial operations principles, of creating and executing of financial plans, of reporting on budget funds spending, accounting principles, rules on business books and bookkeeping documents, information on conducting list of assets and duties, principles of asset, duties and own sources expressing, as well as recognition of income and expenses, financial reporting, annual financial reports audit, publication of annual financial reports, monitoring financial operations and accountancy, and other issues concerning financial activies and accountancy of non-profit organizations.
The Draft of the Law on Financial operations and Accountancy of Non-Profit Organisations applies to domestic and foreign associations and their alliances, foundations, institutions, arts organisations, chambers, employers’ associations and trade unions, religious communities and other legal entities whose primary purpose of establishment and the implementation of their activities is not gaining profit, and who are of a non-profit character based on other special acts. It has been envisaged to apply law provisions concerning conducting business books and registration into the Non-Profit Organisations Register to political parties, as well as to apply provisions regarding submission of reports on budgetary funds spending, on-the-spot controls on that spending and financial monitoring over the public funds resources to religous communities.
The Draft of the Law aims to respond to the openness and transparency principles, especially with regards to financial reporting. It envisages the obligation of publishing financial reports of non-profit organisations through the Register of Non-Profit Organisations, according to the National Strategy for the Creation of an Enabling Environment for Civil Society Development 2012-2016 and Action Plan for the implementation of the Open Government Partnership initiative in the Republic of Croatia 2012-2013. In this regard, it envisages the obligation of publishing non-profit organisations' financial reports through Register of Non-Profit Organisations, as well as through Register of Associations, following the provisions of the new Law on Associations. Moreover, it has been envisaged for non-profit organisations to typically conduct double-entry bookkeeping system, while only exceptionally they can use single entry bookkeeping and apply money measurement accounting principle, in case their asset value at the end of each of the previous three years successively is less than 230.000 kunas, and annual income per each of the previous three years successively less than 230.000 kunas per year. Following the first three years upon its establishing, a non-profit organisation is obliged to conduct double-entry bookkeeping. Also, the law stipulates the obligation of establishing a company (or other form of a legal entity that is not based on a non-profit principle) for those organisations that gain more than 230.000 kunas through their economic activities. The law will come into force on 1 January 2015.
Text of the Final draft on Financial operations and Accountancy of Non-Profit organisations.