Light bulb moment #1:
What is the role of an Accounting Officer and should every NPO have one?
Under the provisions of the Non-profit Organisations Act of 1997 (“NPO Act”), NPO’s that are registered with the Department of Social Development’s NPO Directorate are required to draw up annual financial statements which must include the written report of an “Accounting Officer”. The legal definition of an Accounting Officer is, however, found in the Close Corporations Act of 1984 and provides that a member of any professional accounting body can perform the functions of an Accounting Officer. So for a small or start-up registered NPO with limited funds that is not incorporated as a non-profit company, an Accounting Officer would be a cost-effective alternative to an auditor. If, however, an organisation appoints an independent auditor to audit the annual financial statements, it is not necessary to also appoint an Accounting Officer.
Under the NPO Act, the report of the Accounting Officer must provide limited assurance on three very specific areas, namely that the:
• financial statements of the organisation are consistent with its accounting records;
• accounting policies of the organisation are appropriate and have been appropriately applied in the preparation of the financial statements; and
• organisation has complied with the provisions both of the NPO Act and of its constitution (as they relate to financial matters).
The NPO Act then requires the Accounting Officer’s report to be submitted as part of the annual financial statements to the NPO Directorate, within nine months of NPO’s financial year end. An organisation that submits the report of an independent auditor, rather than that of an Accounting Officer, with its annual financial statements, also meets the requirements of the NPO Act.
In addition to preparing the report, the Accounting Officer can also be requested to compile the annual financial statements, a task which may be too technically challenging for an NPO’s own staff members or volunteers. Independent auditors, on the other hand, should not compile the annual financial statements as this would inherently compromise their independence when auditing the annual financial statements.
If you need to appoint an Accounting Officer, or need any other assistance in relation to your annual financial statements, please do contact CMDS and we can look together at how we could assist.