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LAW ON ACCOUNTING FOR NONPROFIT ORGANIZATIONS

(Official Gazette of RM" No.24/03)

I. BASIC PROVISION

Article 1
This Law shall regulate book keeping, business books, accounting documents
and data processing, recognition of income and expenditure, evaluation of balance
items, reevaluation, financial reports, delivery of financial statements and other
issues related to accounting to the economic relevant community, citizens
associations and foundations, and other forms of association, political parties,
religious communities, religious groups, etc. The Red Cross of the Republic of
Macedonia, Associations of foreigners, foreign and international nongovernment
organizations, humanitarian organizations and associations, trade unions, and other
legal entities established according to special regulations, prescribing them as
nonprofit organizations, if otherwise not regulated by another regulation (hereinafter
as: Nonprofit organizations).

II. MANNER OF ACCOUNTING

Article 2
Nonprofit organizations shall be obliged to conduct accounting, prepare and
deliver accounting statements, in accordance with this law and the recognized
accounting principles, the accounting practice and standards, if the same are not
opposite to this law or other regulation, for the purpose of correct, truthful, secure,
comprehensive, timely and individual presentation of the balance items, the balance
sheet, liabilities, sources of asset, income and expenditure and the results from
operation.

Article 3
Nonprofit organizations shall be obliged to perform accounting according to
the system for double accounting, and according to the schedule of accounts from
the accounting plan for nonprofit organizations.

III. BUSINESS BOOKS, ACCOUNTING DOCUMENTS AND DATA PROCESSING

Article 4

(1) Nonprofit organizations shall be obliged to keep business books in


accordance with the provisions from this law, the recognized standard accounting
practice and accounting standards.

(2) The business books shall provide uniform record and other forms of
records presenting the statement and asset movements, liabilities, sources of
assets, income and expenditures, and the results from the operation.

(3) Nonprofit organizations shall keep records for the income and
expenditures,
they shall also prepare plans, reports and analyses.

(4) The data from the business books should enable competent bodies with a
plan and realization of the profit, preparation and also delivery of financial plans for
other purposes.

Article 5

(1) Nonprofit organizations shall keep business books in Macedonian


language, with Arabic numbers and values expressed in MKD. If abbreviations are
used, codes, signs or symbols, they must be clearly explained.

(2) All data registered in the business books and other reports must be
complete and overall, timely, updated and chronologically presented, i.e. they must
present the time period of their occurrence.

(3) An entered data in the business books may not be altered or amended in a
manner which may later prevent establishment of the initial entered content.

Article 6

(1) The business books of nonprofit organizations shall be the following: A log
book, ledger and additional auxiliary books (analytic records).

(2) Mandatory auxiliary books as stated in paragraph (1) of this article shall be
the following: Cash book, procurement book, inventory of the capital assets, book for
receivables and payables.

(3) Apart from the business books stated in paragraphs (1) and (2) of this
article, nonprofit organizations may keep other ancillary books (analytic records).

(4) The Business books from paragraph (1) of this article shall be treated as
public documents.

Article 7

(1) The business books shall be maintained for the year of operation
equal to the calendar year.

(2) The business books shall be opened at the beginning of the business year
or as of the day of incorporation of a new nonprofit organization.

(3) The initial balance in the ledger at the beginning of the business year must
be the same as the final balance at the end of the previous business year.

Article 8

(1) Nonprofit organizations at the end of a business year shall finalize and
bind the business books. The log book and the Ledger shall be signed by the legal
representative of the nonprofit organization or a an authorized person. This signature
shall confirm the accuracy and compliance with the legal provisions.

(2) If accounting data are electronically processed, after closing the log book
and Ledger, nonprofit organization shall be obliged to print that documents
and then bind it together.

(3) The business books of nonprofit organizations shall be kept for at least the
following periods:

- The Log and the Ledger for ten years,


- Auxiliary books (analytic records) for five years,

(4) The period of maintenance of the business books shall start at the last
date of the year to which they apply.

Article 9

(1) The manner of maintenance of the business books of nonprofit


organizations depends on the technique of entry of the business changes, i.e.
transactions.

(2) The entry technique and data processing of the newly occurred changes,
i.e. transactions of nonprofit organizations may be performed electronically, semi-
automatically and manual data processing, complying with the principled for accurate
book keeping.

(3) Nonprofit organizations shall be obliged, regardless of the manner of


accounting and book keeping, at any time to provide availability to the same, keep
them and protect in the prescribed period, and also guarantying that the records may
be presented at any time.

(4) The Minister of Finance shall prescribe the form and manner of book
keeping for the nonprofit organizations.

Article 10

(1) Entry of data in the business books of nonprofit organizations must be


according to truthful, reliable, comprehensible accounting documents.

(2) An accounting document is a written evidence for the business change, i.e.
transaction.

(3) The accounting document shall serve as the basis for data entry in the
business books.

(4) The accounting documents as stated in paragraphs (1) and (2) of this
article shall serve at the same time as the basis for monitoring and audit.

(5) Nonprofit organizations shall be responsible for preparation of the


accounting documents, and the legal representative of the nonprofit organization or
the authorized person, with its signature on the document, shall guarantee that the
document is reliable and that truthfully presents the accounting statement, i.e.
transaction.

Article 11

(1) Accounting documents shall be maintained in their initial form or


transferred on media for automatic or micrographic data processing, or any other
adequate manner.

(2) Accounting documents, according to their type, shall be maintained for the
following periods:

- The Final statements for employees salaries shall be permanently


maintained, as well as the payments lists for employees salaries, if the same contain
important data regarding the employees;

- The accounting documents based on which data are entered in the business
books shall be kept for a period of five years,

- The documents related to the payment operations shall be kept for a period
of three years;

- The sales and control blocks, auxiliary statements and similar documents
shall be kept for two years.

(3) The Minister of Finance shall prescribe the type, content, monitoring and
movement of accounting documents.

Article 12

(1) Nonprofit organizations shall organize accounting and the manner of data
entry in accounting, in accordance with the provisions of this law.

(2) Nonprofit organizations shall conduct accounting and distribute the


accounts in the Ledger with use of basic accounts, as prescribed with the accounting
plan.

(3) Nonprofit organizations, in accordance with their needs, shall distribute


basic accounts from the accounting plan to analytic accounts (analytic accounting
plan).

(4) The Minister of Finance shall prescribe the accounting plan as stated in
paragraph (2) of this article, as well as the content of the different accounts from the
accounting plan.

(5) The Minister of Finance shall determine which special data shall be
necessary for the system of State records and shall prescribed the form and content
of the Form for the State Records system.
(6) Nonprofit organizations may assign book keeping to an authorized
professional organization, whereas, such action shall no reduce the responsibility of
the authorized persons of the nonprofit organizations regarding overall accounting.

IV. RECOGNITION OF INCOME AND EXPENDITURES

Article 13

(1) Recognition of income and expenditures of nonprofit organizations shall


be performed according to the accounting principle of modified occurrence of
business changes, i.e., transactions.

(2) The accounting principle of modified occurrence of business changes, i.e.


transactions, as stated in paragraph (1) of this article shall mean that the income
shall be recognized for the accounting period when they occurred, in according to
the criterion of measurability and availability. Income is measurable when expressed
in value. Income is available when realized in the accounting period or within a
period of 30 days upon expiry of the accounting period, under the condition that
income is related to the accounting period and serve as evidence for the liabilities in
that accounting period.

(3) The accounting principle of modified occurrence of business changes, i.e.


transactions as stated in paragraph (1) of this article, means that expenditure shall
be recognized in the period when they occurred or within a period of 30 days upon
expiry of the accounting period, and under the condition that the liability occurred in
that accounting period.

(4) Items for the stocks of materials shall be recognized in expenditures


according to the value of procurement. The procurement value shall be comprised of
the purchase price, increased by the import customs duties, VAT, transportation fees
and all other fees which may be directly added to the procurement value, i.e. the
procurement expenses, reduced by discounts and rebate.

V. EVALUATION OF BALANCE ITEMS, REEVALUATION AND INVENTORY

Article 14

(1) The evaluation of the balance items, in context of this law, shall be
determination of the value of separate balance items.

(2) Nonprofit organizations shall be obliged to conduct evaluation of the


balance items contained in the Ledger according to the accounting principle of
modified occurrence of business changes, i.e. transactions.

(3) Long-term and short-term assets shall be expressed according to their


procurement value. The procurement value of long-term and short-term assets shall
be comprised of the purchase price, increased by the import customs duties, VAT,
transportation fees and all other fees which may be directly added to the
procurement value, i.e. the procurement expenses.
(4) The cash in the treasury and accounts in domestic currency shall be
entered in the Ledger with the nominal value, and in foreign currency, according to
the exchange rate of the National Bank of the Republic of Macedonia, on the day of
balance.

(5) Balance items for receivables and payables shall be recognized


according to the agreed agreement amounts.

(6) The writeoff of the value of the long-term assets shall be conducted using
the linear method for write-off with application of annual rates as prescribed by the
Minister of Finance.

(7) The basis for amortization of the long-term assets shall be the
procurement, i.e. reevaluated value of the long-term assets.

(8) Long-term assets, whose individual value at the moment of procurement is lower
than 100 EUR in denar counter value, shall be calcified as small inventory, which
shall be written- off regardless of the term of use.

Article 15

Nonprofit organizations shall be obliged to reevaluate long-term assets, in a


manner as prescribed by the Minister of Finance.

Article 16

Nonprofit organization shall be obliged to at least once a year harmonize the


balance sheet with their sources expressed in the accounting as of 31 December, in
a manner prescribed by the Minister of Finance.

VI. BASIC FINANCIAL STATEMENTS

Article 17

(1) Nonprofit organizations shall be obliged to prepare basic financial


statements, as follows: Balance sheet, profit and loss account, and notes to the
financial statements.

(2) The balance sheet presents the assets, liabilities and sources of assets
according to dates.

(3) Profit and Loss account presents income and expenditures, i.e. the surplus
or shortage realized in the business year or any other period during the business
year.

(4) The notes to the financial statements are detailed presentation and
supplement to the data from the balance sheet and profit and loss account.

(5) The basic financial statement must provide an accurate, truthful and
complete review of the assets, liabilities, sources of assets and income and
expenditures.

(6) The basic financial reports must be kept secret and in their original form.

(7) The basic financial statements from paragraph (1) of this article shall be
prepared for the business year, expressed in MKD and written in Macedonian
language.

(8) The form and content of the financial statements from paragraph (1) of this
article shall be prescribed by the Minister of Finance.

(9) The basic financial statements from paragraph (1) of this article shall be
prescribed by the legal representative of the nonprofit organization or the authorized
person.
(10) The basic financial statement shall comprise the Annual balance sheet.

Article 18

(1) Nonprofit organizations whose total asset value or annual income is less
then 2.500 EUR in denar counter value shall not be obliged to prepare financial
reports and deliver the same in accordance with the provisions from this law.

(2) Nonprofit organizations from paragraph (1) of this article shall be obliged to
maintain treasury book and the book for income and expenditures.

Article 19
Nonprofit organizations shall be obliged to deliver the annual balance sheets
the Public Revenues Office and to the Registry for annual balance sheets with the
Central Registry, until the end of February the next year, i.e. within 60 days from the
day of the status changes.

VII. PENALTY PROVISIONS

Article 20
A violation shall be sanctioned with a fine in the amount of 60.000 to 300.000
MKD charged from the nonprofit organizations, if they:
1) Fail to maintain accounting in a manner as prescribed by law or regulation
adopted based on the law (article 2 and 3);
2) Fail to maintain business books in a manner as prescribed by law or
regulation adopted based on the law (article 4 to 10);
3) Perform entry of data in the business books according to inaccurate and
unreliable documents (article 10, paragraph 1);
4) Do not assign an authorized person for the lawfulness and accuracy of the
accounting documents (article 10, paragraph 5);

5) Fail to adequately and correctly maintain the business books, the


accounting documents, documents and financial statements up to the term
prescribed by this law, or if they fail to assign a person responsible for keeping
thereof (articles 8, 11, 17, paragraph 6);

6) Fail to evaluate balance items in a manner and procedure, as prescribed by


this law or regulation based on this law (article 14);
7) Do not conduct reevaluation according to the provisions from this law
(article 15);
8) Do not conduct inventory according to the provisions from this law (article
16); and
9) Do not prepare and deliver financial reports/statements and annual balance
sheets (articles 17 and 19).

The responsible person of a nonprofit organization shall be sanctioned for


violation related to the above mentioned activities from paragraph (1) of this article,
with a fine in the amount of 30.000 to 50.000 MKD.

VIII. TRANSITIONAL AND FINAL PROVISIONS

Article 21
Nonprofit organizations shall continue to apply the provisions adopted based
on the Law on Accounting ("Official Gazette of the Republic of Macedonia,
No.42/93, 48/93, 6/95, 32/98, 39/99, 70/2001 and 36/2002), until the adoption of the
new regulations according to this law.

Article 22

The Minister of Finance shall be competent, if necessary, for the adoption of


related regulations for enforcement of this law.

Article 23

This Law shall enter in force on the day of publication in the Official Gazette of
the Republic of Macedonia, and shall be valid as of 1 January 2003.