Accounting for public organizations

Accounting is mandatory for all public organizations (hereinafter referred to as NGOs) as required by the Law of Ukraine No. 996-XIV. It must provide for the proper documentation and assessment of the organization’s assets and expenses, received charitable assistance, and other obligations in a properly structured manner. Like any other non-profit organization, a NGO must monitor the use of funds within the framework of its statutory activities, control decisions to achieve statutory goals. Transparent reporting is the key to the success of every public organization.

Tax reporting of public organizations

Non-profit organizations must report systematically to the tax authorities by preparing the following documents:

• Report on the use of non-profit organization income
• Financial statements, which consist of a Balance Sheet and a Statement of Financial Results.

Both documents are submitted annually based on accounting data.

What taxes does a public organization pay in 2025?

NGOs in Ukraine are exempt from paying income tax, since they have non-profit status. However, this eliminates the need to pay other tax payments (when officially hiring employees, paying for services under a civil law contract), in particular:

• personal income tax (18%);
• military duty (1.5%);
• single social contribution (22%).

In addition, a public organization may be a payer of value added tax (VAT) when carrying out transactions for the supply of goods, works, services, the total amount of income of which exceeds 1 million hryvnias during the reporting year (Article 181 of the Tax Code of Ukraine). In this case, it must also pay 20%, 14% or 7%, depending on the category of goods or services.

Accounting of public organizations

Certain features and opportunities for simplifying accounting are provided for NGOs. According to the legislation, such organizations have the right to submit abbreviated financial statements, which include only the balance sheet and the report on financial results. To facilitate accounting, they can use a specially developed Simplified Plan, approved by the Order of the Ministry of Finance No. 186.

At the same time, as a general rule, each public organization must independently develop and approve an Order on accounting policies, signed by the head (and it may differ from the rules provided for in the laws). When forming it, be guided by the Methodological Recommendations, approved by the Order of the Ministry of Finance No. 635. Accountants “Prikhodko and Partners” can significantly simplify this task for newly established NGOs and provide a professional service for developing an accounting policy accordingly.

Accounting for income and expenses of public organizations

Let us consider the features of accounting for NGOs for the following categories of income and expenses:

1. targeted and non-targeted financial assistance (charitable contributions). In the balance sheet, the assistance received, depending on its distribution, may be reflected in cash, inventories or other working capital. Assistance received in foreign currency must be accounted for using the appropriate currency account and accounting for exchange rate differences;
2. receipt of assets (equipment, premises, transport) for use. When receiving property, an acceptance and transfer act is drawn up in addition to the contract, and it is recorded on the off-balance sheet account of the NGO;

Other possible income for public organizations is interest, dividends, royalties, insurance payments, sale of fixed assets and others. Accounting for these incomes is carried out using the appropriate accounts of class 7 of the Chart of Accounts.

Cost accounting is no less important and is carried out on the basis of primary documents confirming the fact of each business transaction (acts of work performed, bank statements, invoices, etc.). These documents must be kept for three years from the date of the transaction and submitted to confirm the accuracy of the entered data or when undergoing a tax audit, respectively.

As a general rule, the costs of a non-profit organization:

1. are reflected simultaneously with a decrease in assets or an increase in liabilities
2. are recognized in the same reporting period as income, if they are related to the sale of relevant goods or services;
3. are accounted for in accounts of class 8 “Expenses by elements” and class 9 “Activity expenses” of the Chart of Accounts approved by Order of the Ministry of Finance No. 291.

Main accounting entries for public organizations

Main accounting entries, expressed in the choice of Debit (D) and Credit (K), are divided into the following categories:

• receipt of targeted financing for the purchase of fixed assets – to a bank account (D-311, K-482), transfer of funds to the supplier (D-631, K-311), depreciation (D-948, K-131);
• receipt of other current assets – according to the act of acceptance and transfer (D-22, K-484), use for the intended purpose (D-949, K-22);
• transfer of humanitarian aid to a bank account (D-311, K-483), transfer of humanitarian aid to recipients based on a transfer act (D-949, K-28), and others.

Properly organized accounting of public organizations is a key factor in successful activities. In order to ensure effective management of NGO resources and compliance with legal regulations, we recommend contacting qualified accountants. To find out the cost of providing accounting support services for your NGO from specialists at “Prikhodko & Partners” – fill out the form below.