Financial Reporting of the Organizations in Not-for-profit Service Sector in the Czech Republic

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Stef92 Technology
The paper deals with financial reporting of not-for-profit organizations in the Czech Republic. Non-for-profit organisations do not have making profit, but they achieve benefits for their clients from performed services, as a primary goal. Services are obviously provided at a price lower than market price or even free of charge, therefore not-for-profit organizations take a variety of sources for financing the provided services. Financial reporting in the Czech Republic is regulated by legislation, primarily by Act No. 563/1991 Coll., on Accounting, that is followed by implementing Decrees on this act for different types of accounting units – depending on whether it is a state or non-governmental not-for-profit organization, reporting is regulated by different ones. The problem is illustrated by the example of two pre-school educational institutions operating in the same town, in one case it is a non-governmental organization and the other one is a state organization. The aims of the paper are: firstly, to identify main differences in financial reporting specific to a particular area of two selected accounting units mentioned above, secondly, to identify main differences in sources of finance of these entities, thirdly, looking in depth at selected items of financial statements of each organisation to evaluate the economic situation of the entity using selected financial indicators. Based on the review of scientific literature and applicable legislation the goals pointed above were achieved by the research methods of description (legislative regulation of the financial reporting mostly) and descriptive comparison between the financial statements. The empiric data was obtained from annual reports of the selected entities. Based on the analysed data, the synthesis of the impacts of different regulation and reporting on financial position of two selected entities was made.
financial statements, service sector, state and non-governmental not-for-profit organizations, pre-school educational institution