Accounting for a non-profit association under the 1901 law: what are your obligations?

Accounting for non-profit associations under the 1901 law: where to start?

When you set up a non-profit association under the 1901 Act, or become its treasurer, it's easy to ask yourself this question when you want to do things by the book.

So what are the association's accounting obligations? What accounting documents are required? Do you have to follow the association's chart of accounts?

All the answers, our advice and a selection of tools in this article!

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Accounting requirements for non-profit associations

While all associations are required to keep accounts, non-profit associations governed by the French law of 1901 are not required to present their accounts in any particular format. They are therefore free to choose whether or not to keep accounts.

Under the 1901 law, an association may choose to keep cash accounts, either :

• single-entry: the association enters the year's receipts and disbursements in a journal book,
• double-entry: receipts and disbursements are also recorded in a journal book, but with so-called offsetting accounts.

On the other hand, certain associations are still subject to certain accounting presentation requirements, depending on :

• the nature of the activity,
• the amount of funding received,
• the size of the organization.

Why keep accounts for an association?

When you're a small association, it's easy to be tempted to see bookkeeping as a constraint, and to devote as little time to it as possible.

But just because your association's mission is non-profit doesn't mean that well-kept accounts can't bring you benefits - quite the contrary!

Here are just a few of the benefits:

• greater transparency vis-à-vis members, who have a right of access to the accounts of the association to which they belong
• in the event of an audit by the authorities, the association must be able to present its accounts up to date and in accordance with the rules;
• better management of the association to steer its development, thanks to a clear overall view of the financial situation, enabling informed decisions to be taken;
• apply for subsidies, which require the presentation of accounts and financial statements to justify the use of resources.

Auditors

Who can audit an association's accounts? A number of bodies may be called upon to audit an association's accounts:

• the Inspectorate General of Finances, if your association has received subsidies from the State, the EU or a public body,
• territorial delegates, if your association has received subsidies from a local authority,
• a regional chamber, if your association has received a grant of more than €1,500 from a public body or local authority,
• the Cour des Comptes, if your association has received a subsidy from the State or the European Union,
• URSSAF, for all matters relating to social security charges and contributions,
• the tax authorities, if the association is subject to corporation tax (IS).

See also: A complete guide to managing your association

Certification of your association's accounts

Does your association need to have its accounts certified?

You must have your annual accounts certified by a statutory auditor, if your association :

• includes this obligation in its articles of association,
• receives more than €153,000 in public subsidies per year,
• is responsible for monitoring air quality,
• is in charge of managing a housing solidarity fund,
• is a continuing professional training organization and exceeds two of the following three thresholds,
  • 228,000 € balance sheet
  • 153,000 € in resources
  • 3 employees
• carries on an economic activity and exceeds two of the following three thresholds.
  • 1,500,000 € balance sheet
  • 3,100,000 € in resources
  • 50 employees

If you are not obliged to have your accounts certified, you can still call on the services of a statutory auditor on a voluntary basis.

How do you go about certifying an association's accounts?

First of all, you need to choose a statutory auditor, who will be appointed when the articles of association are drawn up, or at the General Meeting if the association already exists.

This person will check the accounts at the end of the year, carrying out an audit to verify that everything has been done according to the rules, and that the documents provided correspond to reality. If the treasurer or a chartered accountant has already carried out this verification work, he or she can pass it on to the statutory auditor to facilitate his or her mission.

What type of accounting is required for a 1901 association?

Association cash flow accounting

Cash accounting involves recording and tracking only expenses and receipts.

Each cash inflow or outflow gives rise to an accounting entry which must reflect :

• the date of the transaction,
• the nature of the transaction
• the amount of the transaction,
• whether it is a revenue or an expense.

At the end of each month, the difference between expenditure and income gives a simplified result.

🤔 For which associations?

This type of accounting is sufficient for newly-created associations or small structures, which don't have to manage debts and receivables.

✅ Advantages

It requires no special knowledge of accounting and takes little time to complete.

❌ Disadvantages

It doesn't enable you to keep track of debts and receivables, to properly steer the association's management and development, and doesn't allow you to apply for grants or hire staff, for example.

See also: How do you manage your association's cash flow? Tips and a toolbox!

Commitment accounting

In addition to recording cash flows, commitment accounting also records debts and receivables when an invoice is received or issued.

To ensure that entries correspond perfectly to cash flows, bank reconciliations must be carried out regularly. To do this, each accounting entry linked to the bank account must be compared with the actual movements recorded on the statements.

🤔 For which associations?

An association will use accrual accounting if:

• its articles of association so provide,
• it wants to apply for subsidies,
• it wants to recruit,
• it wants to carry out an economic activity,
• its vocation is commercial and it pays corporate income tax,
• its activity requires debts and receivables,
• it simply chooses to do so.

✅ Advantages

It gives a complete picture of the financial situation, and enables the association to be steered more effectively.

❌ Disadvantages

More complex than cash accounting, it is time-consuming and can be difficult to keep for someone not initiated to accounting, especially if not equipped with accounting software or not accompanied by a chartered accountant.

2020 association chart of accounts: new rules

Depending on the case, the accounting of an association under the 1901 law is far from trivial. In particular, for associations subject to the presentation of their accounts, it can prove complex.

It was with this in mind that the associative chart of accounts was introduced in the early 2000s. It serves as a reference for keeping accounts.

An amended version has been in force since January 1, 2020.

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Accounting software to automate your bookkeeping?

Just because you're an association doesn't mean you can't equip yourself with good accounting software. They offer a number of advantages, such as

• fewer manual errors
• real-time visibility of cash flow, thanks to dashboards,
• automation of certain tasks (accounting entries, bank reconciliation, for example),
• and considerable time savings.

Here's a selection of software you may find useful:

• EBP's Itool dynamically updates your data and reminds you of your tax filing deadlines.
• Sage 100c informs you of overdue payments in real time. Good to know: the Sage Foundation is offering two free licenses to eligible non-profit organizations.
• Zervant makes it easy to track receipts and generate financial reports automatically. This solution even lets you create your own website.
• Specializing in association management, memboGo lets you manage your accounting journal, subscriptions, renewals and financial contributions, all from a single interface.

Find the right management software for your association with this quiz:

So, are you ready to take charge of your accounting?