The Accounting Department of the Ministry of Finance ("MOF") has recently issued the Interpretations No. 1 of the Accounting System for Non-governmental Non-profit Organizations (Draft for Comment) (the "Draft for Comment") to seek opinions from the entities concerned by February 28, 2020.
The Draft for Comment touches upon 14 issues mainly in the following three aspects: first, four pending issues that have not been clarified in the Accounting System for Non-governmental Non-profit Organizations, i.e. long-term deferred expenses, registered capital, adjustments to prior years' net assets, and investment to set up other non-governmental non-profit organizations, are clarified. Second, for another two issues, namely restricted net assets and income derived from government procurement of services, further clarifications are provided on the relevant provisions of the Accounting System for Non-governmental Non-profit Organizations. And third, as for eight issues, i.e. scope of application, long-term equity investment and consolidated financial statements, refunding, interest on deposit, tax-related business, asset impairment losses, cash flow statement, and explanatory notes to financial statements, improvement is made to the relevant provisions of the Accounting System for Non-governmental Non-profit Organizations.