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NGOs in Switzerland : How to increase transparency in your accounting?
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NGOs in Switzerland : How to increase transparency in your accounting?

NGOs work with noble ambitions but have unfortunately suffered from scandals questioning their operating. From sex scandals to fraud or money laundering, when an NGO is at the heart of a scandal, it is the whole humanitarian aid that suffers the consequences. If Swiss NGOs do not make headlines, they struggle to find new donors who seem more and more reluctent. This is why the requirements for transparency in the financial management of organizations have become increasingly high.

 

What are the accounting obligations of an NGO?

Since 1 January 2008, the authorities have clarified a number of rules. Official accounting and auditing by size rather than by legal status were made mandatory.

• If it is an association, the committee must keep official accounts. The books must be clear, easy to consult and complete, so that any party concerned can have an overview as fair as possible of the financial health of the association.

The Code of Obligations (CO) applies, the accounts must be kept in Swiss francs and kept for at least 10 years.

The General Assembly and the statutes dictate how the financial control is carried out. The association may be subject to a limited audit by an auditor if a member requests so.

It may be subject to an ordinary audit in which the legal and statutory compliance of the accounts and the existence of an effective internal control system will be verified if, during two successive financial years, two of the following values are exceeded:

- balance sheet total: CHF 10 million;

- turnover: CHF 20 million;

- workforce: 50 full-time jobs in annual average

 

• In case of a foundation, an external auditor registered with the Commercial Register must be designated.

 

However, if there has been no public cash collection and the total accounts for two consecutive financial years is less than CHF 200,000.- the auditor may obtain a waiver from the supervisory authority.

 

A qualified auditor must be appointed if:

- The foundation receives donations from the public or undertakes fundraising activities of more than CHF 100,000.- for two consecutive financial years

- Two of the following values are exceeded:

• balance sheet total: CHF 10 million;

• turnover: CHF 20 million;

• workforce: 50 full-time jobs in annual average;

• the foundation must create group accounts;

• the foundation raises funds through a bond issue.

 

What are the many benefits of transparency in your accounting?

Unlike a company, a non-profit organization have no owner. However, it relies on many interest groups who want to know how the funds are used. Clear accounting will show through its balance sheet that the investment strategy is in line with the values ​​it advocates. An NGO that loses its credibility can rapidly face difficulties with its financial ground. Transparency therefore plays an important role in increasing and reinforcing the image of an organization's reliability.

 

STRATEGY AND PERFORMANCE

Even if non lucrative, an NGO seeks to achieve concrete goals and still needs to plan the use of its resources. The clearer and more updated the accounting is, the better the organization is able to make the best decisions, make the most of its expenses and achieve its ambitions. Transparency identifies both risks and opportunities while maximizing efficiency and effectiveness.

 

TRUST

By presenting a complete performance report, with details on governance, objectives and strategy, concrete activities and results (successes or failures), evaluation of projects and implementations, international organizations provide the essential elements to open communication that will reinforce the trust of stakeholders and the general public.

 

 

How to increase transparency in your finances?

In 2002, the Swiss GAAP FER Commission implemented the FER 21 standard for the presentation of the accounts of public non-profit organizations. Considered to be the best presentation of accounts in Switzerland, it aims to produce a performance report that clearly informs about the efficiency (yield capacity and profitability) of the funds used.

A survey carried out as part of the CTI project research blatantly shows that the institutions applying the FER 21 have much higher ratios in terms of relevance, transparency and quality concerning the balance sheet, the operating account, the financing table, the capital change table, the appendix and the performance report. Following this standard, which highlights, among other things, the detail of fundraising costs, a faithful image of the assets and liability and the investment strategy, is a considerable asset for an NGO.

The FER 21 standard is also a condition to obtain the ZEWO quality seal. Although the procedures for obtaining this certification may be binding, it demonstrates a genuine desire for transparency in the organization and is sometimes an important point to get specific funding.

Instead of internal hiring, there is a simple and cost-effective solution to have transparent accounting , which relies on outsourcing accounting and administrative management to a fiduciary. If they rely on new technology to set up optimized processes, your accounting and administrative management will gain efficiency and so you’ll be able to focus on your projects.

Synergix, which has been working with major international organizations for many years, applies the FER 21 standard and implements the best technology. Accounting is managed in real time and access to the IODD online platform provides a clear overview of the NGO's financial situation 24/7. Depending on the NGOs and their goals, the accounting firm can go further by setting up analytical reports and creating relevant analysis to enable the NGO to evaluate and optimize their projects, while responding to donor expectations.

If at first transparency in the governance and finances of an NGO may seem complicated to implement, it only brings benefits. By outsourcing your accounting and administrative management to a new generation accounting firm composed of a team of certified experts, you make sure you only get the benefits. Therefore, you will be able to provide transparent accounts, allowing you to always be able to effectively answer potential tricky questions, have the necessary resources for an effective and efficient project optimization and improve credibility with stakeholders.