THE OHADA UNIFORM ACT RELATING TO THE ACCOUNTING SYSTEM FOR NOT-FOR-PROFIT ENTITIES (private translation)
TABLE OF CONTENTS
CHAPTER 1: General provisions………………………………………………………………………………….
CHAPTER 2: Annual financial statements…………………………………………………………………….
CHAPTER 3: Means of control…………………………………………………………………………………….
CHAPTER 4: Penalties……………………………………………………………………………………………….
CHAPTER 5: Final provisions……………………………………………………………………………………..
UNIFORM ACT RELATING TO THE ACCOUNTING SYSTEM OF NON-PROFIT ENTITIES
PART 1: DEFINITIONS AND CONCEPTUAL FRAMEWORK
The Council of Ministers of the Organization for the Harmonization of Business Law in Africa (OHADA)
Having regard to the Treaty on the Harmonization of Business Law in Africa, signed in Port-Louis on 17 October 1993, as revised in Quebec City on 17 October 2008 ;
Having regard to the Uniform Act on Accounting Law and Financial Reporting of 26 January 2017;
Having regard to the report of the Permanent Secretariat and the observations of the Contracting States;
Having regard to Opinion No. 001/2022/AC dated 06/09/2022 of the Common Court of Justice and Arbitration;
Having deliberated, unanimously adopts, by the Contracting States present and voting, the Uniform Act set out below:
Chapter 1- General provisions
A single accounting system, common to all Contracting States, called the accounting system for non-profit making entities, abbreviated to SYCEBNL, annexed to this Uniform Act, is hereby instituted.
Any not-for-profit entity within the meaning of Article 2 below, which has its registered office in one of the Contracting States to the Treaty on the Harmonization of Business Law in Africa or which carries out its activities on the territory of the said State, shall be subject to the provisions of this Uniform Act.
A non-profit-making entity means any organization which pursues a nonprofit purpose and whose resources, if any, generated by its activity are used for the operation and realization of its corporate object.
Not-for profit entities shall comprise, in particular:
- Associations and professional bodies;
- Entities whose purpose is the management or administration of development projects generally financed by bilateral, multilateral, private or state donors.
The entities referred to above, when they are not subject to the public accounting system, to the accounting system subject to a special regime, or to specific national provisions, are required to set up an accounting system, known as financial accounting, in accordance with the rules applicable to the accounting system of non-profit entities and provided for by the provisions below.
The provisions of the Uniform Act relating to accounting law and financial reporting shall apply to the entities referred to in Article 2 above, with the exception of Articles 5, 8, 10 to 13, 17 paragraphs 7 and 8, 18, 19 fourth indent, 21, 25 to 34, 49, 69, 70, 71, 73 to 113.
Chapter 2 – Annual financial statements
A complete set of annual financial statements includes:
- for associations and professional bodies, the balance sheet, the income statement, the cash flow statement and the notes to the financial statements;
- For development projects, the Sources and Uses of Cash schedule, the budget execution table, the cash flow reconciliation table, the balance sheet, the income statement and the notes to the financial statements.
The financial statements form an indivisible whole and provide a true and fair description of events. The financial statements are prepared and presented in accordance with generally accepted accounting principles.
The financial statements are prepared and presented in accordance with the models of the accounting system for not-for-profit entities.
An entity that correctly applies the accounting system for not-for-profit entities is deemed to give a true and fair view of its position and operations in its financial statements.
Where the application of an accounting requirement proves insufficient or inappropriate to give a true and fair view, additional information or justification must be provided in the notes to the financial statements.
The annual financial statements referred to in Article 4 shall be made compulsory, in whole or in part, depending on the size of the entities assessed in accordance with the criteria referred to in Article 6 below.
The presentations of the annual financial statements and the keeping of the accounts accepted are the Standard Accounting System and the Minimum Cashflow System as the case may be.
All entities are subject to the Standard Accounting System of presenting financial statements and keeping accounts, unless an exception is made due to their size.
The legal regime for the filing of financial statements is subject to the domestic legislation of each State Party.
Small entities shall be subject, unless they opt out, to the Minimum Cashflow System, abbreviated MCS.
Entities whose annual resources are less than or equal to the following thresholds shall be eligible for the Minimum Cashflow System:
- Grant: thirty million (30,000,000) CFA francs or the equivalent in the monetary unit which is legal tender in the State Party;
- Contributions and other incomes: thirty million (30,000,000) CFA francs or the equivalent in the currency unit which is legal tender in the State Party;
- Donations and/or legacies: thirty million (30,000,000) CFA francs or the equivalent in the currency unit that is legal tender in the State Party;
- Development project resources: thirty million (30,000,000) CFA francs or the equivalent in the currency unit that is legal tender in the State Party;
- Other resources: thirty million (30,000,000) CFA francs or the equivalent in the currency unit which is legal tender in the State Party;
If any of the above resources exceeds the above thresholds, or if the cumulative resources over two financial years exceed thirty million (30,000,000) CFA francs or the equivalent in the currency unit that is legal tender in the State Party, the entity shall be eligible for the Standard Accounting System.
The balance sheet shall give a separate description of the assets and liabilities of the entity. It shall show the entity’s equity separately.
The profit and loss account of professional associations and orders shall list the income and expenses which show the net surplus or deficit for the financial year.
It must be preceded, during the financial year, by all depreciation, amortization and provisions necessary to take account of the consumption of economic benefits, losses in value, risks and probable expenses, even in the event of an absence or insufficiency of surplus.
Account must be taken of risks, charges and income arising during the financial year or during a previous financial year, even if they are only known between the end of the financial year and the date on which the accounts are closed.
The profit and loss account for development projects and similar entities lists expenses without depreciation or amortization and a proportion of resources equivalent to expenses, so that the balance of operations for the financial year is zero.
The cash flow statement shows cash inflows and outflows for the year.
The Sources and Uses of Cash schedule summarizes all uses, fixed assets and expenses, without depreciation or amortization, as well as funds received from lenders.
The budget implementation table shows the budget for the year and the actual expenditure for the year.
The cash reconciliation table shows cash movements from the beginning to the end of the financial year,
The notes to the financial statements supplement and clarify the information provided in the other annual financial statements.
The balance sheet for the financial year shall show separately:
- on the assets side: fixed assets, current assets, cash and cash equivalents and the translation adjustment assets;
- on the liabilities side: fixed resources, current liabilities, cash-liabilities and translation adjustments.
The profit and loss account for the financial year shall show income on the credit side and expenditure on the debit side, broken down by type.
For development projects, the operating account shall show on the debit side expenses without depreciation or amortization and, on the credit side, a proportion of resources equivalent to the total expenses, in order to obtain a zero balance for the financial year.
The cash flow statement for the year shows net cash at the beginning of the year, cash flows from operating activities, cash flows from investing activities, cash flows from equity, cash flows from external funds and net cash at the end of the year.
The Sources and Uses of Cash schedule shows the uses (fixed assets and expenses) without depreciation or amortization, the funds received, the excess or deficit of funds received over uses, and the amount of cash available.
The budget implementation table shows the budget for the financial year, disbursements, commitments not yet paid, actual expenditure, the available budget appropriation and the implementation of the budget in relative terms.
The cash reconciliation table shows the cash position at the beginning of the financial year, transfers of funds received from donors, uses of funds for the financial year, the cash position at the end of the financial year and pending payments.
The inventory book is a compulsory document on which the following entries are made:
- For associations and professional bodies, the balance sheet, profit and loss account and cash flow statement for each financial year, together with a summary of the stock-taking operation;
- For entities whose purpose is the management or administration of development projects, the Sources and Uses of Cash schedule, the budget execution table, the cash flow reconciliation table, the balance sheet, the operating account for each financial year as well as a summary of the inventory operation.
The annual financial statements described in Articles 7 to 13 are accompanied by notes to the financial statements, which are cross-referenced with the related information.
The notes to the financial statements shall contain information in addition to that presented in the balance sheet, the income statement, the operating account, the cash flow statement, the statement of source and application of funds, the budget implementation table and the cash flow reconciliation table. The notes to the financial statements provide narrative descriptions or breakdowns of items presented in the other financial statements, as well as information relating to items that do not meet the criteria for recognition in the other financial statements.
The notes to the financial statements include all material items that are not disclosed in the other financial statements and are likely to influence the judgement that users of the documents may make about the entity’s assets and liabilities, financial position and performance. This applies in particular to the amount of commitments given and received, which must be monitored by the entity as part of its accounting organization.
Any change in the presentation of the annual financial statements or in valuation methods must be disclosed in the notes to the financial statements.
The annual financial statements of each entity shall comply with the following provisions:
- The use of a standardized chart of accounts for the entity’s accounting, as listed in the accounting system for non-profit entities;
- the compulsory keeping of books or other authorized media as well as the implementation of procedures necessary for an accounting organization allowing reliable internal control and external control through the intermediary, if necessary, of the auditor, of the reality of the operations and the quality of the accounts, while favoring the collection of information;
- At the close of each financial year, the administrative or management bodies, as applicable, shall draw up the inventory and the financial statements in accordance with the provisions of the Uniform Act and shall draw up an activity report; the activity report shall describe the situation of the entity during the past financial year, its prospects for development or its foreseeable development and the development of its cash position; the important events which have occurred between the closing date of the financial year and the date on which the report is drawn up must also be mentioned therein;
- The opening balance sheet for a financial year must correspond to the closing balance sheet for the preceding financial year.
- Any non-legally founded offsetting between asset items and liability items in the balance sheet and between expense items and income items in the profit and loss account is prohibited.
- The presentation of the financial statements is identical from one financial year to the next,
- Each item in the financial statements shows the figure relating to the corresponding item in the previous financial year.
If one of the items in a financial statement is not comparable with that of the previous year, the previous year must be adjusted. The lack of comparability or the adjustment of the figures is indicated in the Notes to the financial statements.
For the first year of application, the entity is only required to complete column N_1 of the balance sheet.
CHAPTER 3 – Means of control
A register of donors shall be established for each non-profit entity for all gifts, donations and legacies received by the entity.
The register of donors shall be signed, initialled and numbered consecutively by the competent court of each Contracting State concerned.
The register of donors shall contain:
- The date of the transaction ;
- The full names, domicile and e-mail address of the natural persons making the donation;
- The name, registration number, tax identification number, registered office address and e-mail address of the donating legal entities.
- The amount and method of release of the donation/legacy made available to the non-profit entity in cash, by cheque, by transfer or in kind.
All entries in this register must be signed by the legal representative of the non-profit entity.
This register may be kept in a physical bound or stapled version or in an electronic version.
The entity shall keep an up-to-date register of donors.
If there is an auditor, he shall submit a report to the general meeting or the body which takes its place.
To the project’s members or funder, a report stating that the register of donors exists and giving its opinion on whether it has been kept up to date.
If there is no auditor, a declaration by the directors attesting to the proper maintenance of the register of donors is appended to the said report or submitted to the general meeting or the body which acts as such.
Any non-profit-making entity shall be required to appoint at least one auditor where, at the close of the financial year, it meets one of the following three criteria:
1) A balance sheet total in excess of one hundred million (100,000,000) CFA francs or the equivalent in the currency unit that is legal tender in the State Party;
2) Annual resources in excess of two hundred million (200,000,000) CFA francs or the equivalent in the currency unit which is legal tender in the State Party;
3) A permanent workforce of more than twenty (20) people;
The entity is no longer required to appoint an auditor if it no longer meets any of the three (3) criteria set out above during the two (2) financial years preceding the expiry of the auditor’s term of office.
For other not-for-profit entities that do not meet these criteria, the appointment of an auditor is optional. However, it may be requested in court by at least ten percent (10%) of the members of the entity.
The financial statements and the annual management report are sent to the auditor, if one has been appointed, at least forty-five (45) days before the date of the ordinary general meeting or the body that takes its place of the association and the professional order, or the date of transmission of the auditor’s report to the donors and/or the beneficiary state of the development project.
In entities which voluntarily or compulsorily appoint an auditor, such auditor shall:
1) either issue an opinion stating that the financial statements are true and fair and give a true and fair view of the results of the operations for the past financial year and of the financial position and assets and liabilities at the end of that year;
2) express a qualified or adverse opinion, with reasons, or state that they are unable to express an opinion.
The auditor expresses an opinion on the fairness and consistency of the information given in the management report with the financial statements.
The auditor shall be chosen by the members of the non-profit-making entity from among the chartered accountants entered on the roll of the Order of Chartered Accountants or the body which acts as such in each Contracting State.
The auditor shall be appointed for three (3) financial years, renewable once. However, if the entity exists for less than three financial years, its term of office shall be reduced to that period.
The auditor shall be appointed by the general meeting of the entity or the body that acts as such, by a majority of its members representing at least more than half of the members present or represented, or by the donor and/or the beneficiary state party of the development project.
If the above majority is not obtained, and unless otherwise stipulated in the articles of association, the general meeting of the entity or the body acting in its stead convened on second call may validly appoint the auditor if the quorum of one tenth (1/10) of the members present or represented is reached.
If the above quorum is not reached on second call or if the general meeting of the entity or the body that acts in its stead does not appoint an auditor, any member may apply to the competent court for the appointment of an auditor.
If the general meeting or the equivalent body does not reappoint the auditor or replace him on expiry of his term of office, the auditor’s term of office shall be extended, unless he expressly refuses to do so.
The extension of the auditor’s term of office provided for in paragraph 1 of this Article shall run until the next general meeting or the next meeting of the body acting as auditor which rules on the entity’s accounts, or until the next approval of the project’s accounts by the donor or the State Party.
The accounting system of not-for-profit entities shall be regularly updated, by decision of the OHADA Council of Ministers, on the recommendation of the Standardization Commission for the Accounting Profession in accordance with the regulation on the creation, organization and functioning of the said Commission.
CHAPTER 4- Penalties
Managers of non-profit-making entities are liable to a criminal penalty if they :
– Have not, for a financial year, drawn up the inventory and the annual financial statements, as well as the activity report;
– Have knowingly drawn up and communicated financial statements that do not give a true and fair view of the assets and liabilities, the financial situation and the results of the financial year;
– have not kept and updated the register of donors.
Managers of not-for-profit entities who have not caused the appointment of the entity’s auditor or have not convened the auditor to the general meeting or to the meeting of the body acting as auditor ruling on the entity’s accounts shall incur a criminal penalty.
Managers of non-profit-making entities or any person in the service of the entity who knowingly obstruct the auditor’s verification or control, or who refuse to allow the auditor to inspect all documents useful for the performance of his duties, in particular contracts, books, accounting documents and registers, shall incur a criminal penalty.
The offences provided for in this Uniform Act shall be punished in accordance with the provisions of the criminal law in force in each Contracting State.
Chapter 5 – Final provisions
This Uniform Act, to which the accounting system for non-profit-making entities is annexed, shall be published in the OHADA Official Gazette within sixty (60) days from the date of its adoption. It shall also be published in the Contracting States in the Official Gazette or by any other appropriate means.
This Uniform Act shall be applicable as from 1 January 2024.
Done in Niamey on 22nd December 2022.