Restoring the books of an NGO that never had an accountant

What restoring the books means for an NGO

Restoring the books means building an organisation’s accounting from its registration date using bank statements and primary documents, as if records had been kept from the start. A public association or charitable foundation needs to do this before filing its annual reports and before any grant audit, because both rely on accounting registers that simply do not exist without an accountant.

A typical case looks like this. The organisation was registered a few months ago and received non-profit status code 0032. There are few transactions: membership fees, several donations, a first grant in foreign currency. There has been no accountant from day one, and the bank statements and contracts sit in one folder. Now everything has to be put in order and the year closed. We receive this kind of request often, and the earlier the work starts, the fewer amended returns and recalculations are needed later.

Why restore before the annual reports and before the grant audit

The annual financial statements and the report on the use of income of a non-profit organisation are prepared from accounting registers. Without registers the figures in the reports have nothing behind them, and when the tax authority checks non-profit status, these registers are exactly what it looks at.

The same goes for the donor. A grant auditor starts with the trial balance by project and a reconciliation of receipts with the bank. When the books are restored during the audit, deadlines slip and the audit report contains findings that could have been avoided.

The risks of leaving the books unrestored

Loss of non-profit status. If the tax authority finds that income was used for purposes other than those in the charter, the organisation can be removed from the Register of Non-Profit Institutions and Organisations and become liable for corporate income tax. Receipts that are missing from the reports and whose origin the organisation cannot explain also raise questions. More on this in our article on non-profit status in 2026.
Penalties for missed reports. Some reports must be filed even when there were no transactions. A single penalty is small, but repeat violations cost more, and missed reports pile up every quarter.
Donor questions. The donor wants to see that grant funds are accounted for separately and that every expense is supported by a document. If the books are put together retroactively at reporting time, the donor may ask for further explanations or delay the next tranche.
Responsibility of the head. Under the Law on Accounting and Financial Reporting, the head of the organisation or an authorised body is responsible for organising the accounting. Having no accountant does not remove that duty.

How restoration works, step by step

The sequence is the same for a public association and a charitable foundation; the volume differs. A young organisation with one grant has a few dozen transactions, while a foundation with several projects over several years has thousands. This is how we approach restoring the books for non-profit organisations.

Collecting statements and documents. Bank statements for all accounts from the date they were opened, including foreign currency accounts, contracts, acts of acceptance, delivery notes, expense documents, the grant agreement with its budget, the charter and decisions of the governing bodies.
Sorting receipts by type. Each receipt goes into one group: membership fees, charitable donations, grants, targeted financing, other income. The bookkeeping entries, the tax status and the report on the use of income all depend on this.
Accounting policy. We draft an order on accounting policy effective from the registration date: which accounts are used, how analytics by project are kept, how income from targeted receipts is recognised, how shared costs are allocated between projects, and the threshold for low-value non-current assets.
Chart of accounts and analytics. Targeted receipts are recorded on account 48 «Targeted financing and targeted receipts» with analytics by each source and project. The unspent grant balance is then visible at any date.
A grant in foreign currency. Balances on the currency account are revalued at the National Bank of Ukraine rate, so exchange differences arise. They must be shown as the Ukrainian accounting standards (NP(S)BO) require and, at the same time, as the donor expects, and the two approaches do not always match. We cover this separately in the article on exchange differences in a grant project.
Property received free of charge. Equipment, furniture and materials received as charitable aid are recorded at fair value on the basis of acceptance acts. For non-current assets, income is recognised gradually, in step with depreciation.
Salaries and civil-law contracts. We check employment contracts, orders, timesheets, accrual of personal income tax, military levy and the unified social contribution (ЄСВ), and whether payroll reports were filed. Civil-law contracts are reviewed separately for signs of an employment relationship.
Rebuilding the registers. We post all transactions in the accounting software, produce trial balances, reconcile balances with the bank and counterparties, and carry out an inventory count of property.
Missed and nil reports. We determine which reports the organisation should have filed for the period and file the missing ones. If reports filed earlier contain errors, we prepare amended ones.
Annual reporting. We prepare the financial statements for the year and the report on the use of income of a non-profit organisation, which are filed with the tax authority together.

What to do when documents are missing

An incomplete set of documents is normal for an organisation that had no accountant. This is how we deal with it.

The bank. The bank provides statements and copies of payment instructions on request for any period. A statement confirms the movement of funds but does not replace the primary document for an expense.
Counterparties. We send suppliers and contractors requests for copies of acts and delivery notes, as well as reconciliation statements.
The donor. The signed grant agreement, the approved budget and correspondence on budget changes also serve as a basis for accounting entries.
Internal documents. If a transaction took place but the document cannot be obtained, we prepare an act or an explanatory note signed by the head, describing the transaction and referring to the bank statement.
Lost documents. If documents existed but were lost or destroyed, the Tax Code sets out a separate procedure that includes notifying the tax authority. That is a different situation from documents that were never drawn up.

The donor assesses expenses without primary documents separately and may treat some of them as ineligible. So we collect the documents for grant funds first.

How long it takes and what it depends on

Time and cost depend on the number of months to restore, the number of transactions and bank accounts, the number of projects and donors, whether there are currency transactions and employees, and the state of the documents. An organisation registered a few months ago, with one grant and a full set of statements, usually needs a few weeks of work. Several years of activity and projects from different donors take longer. We give the exact scope once we have seen the statements and the list of contracts.

What the organisation has at the end

An accounting policy approved from the registration date.
Restored registers with analytics by funding source and project.
Reconciled balances with the bank, counterparties and the donor.
Missed reports filed and a calendar of what to file next and when.
Annual financial statements and the report on the use of income, ready for filing.
A list of findings: where documents are missing, which risks remain and what to do about them.

With books in this state the organisation can go through a grant audit and apply to new donors who ask for financial statements at the assessment stage.

How to keep it from happening again

An accountant from day one. In-house, outsourced or part-time, but from the registration date. Restoring the books usually takes longer and costs more than keeping them as you go.
A document for every transaction. A rule for the whole team: no payment without a contract, an invoice and an act or delivery note.
Separate accounting for each grant from the first receipt, by the donor’s budget lines.
A reporting calendar with the dates of tax, payroll and donor reports.
Monthly reconciliation of bank statements with the books.

If the organisation does not plan to hire an accountant yet, the books can be handed to an external team. We provide ongoing accounting support after restoration for public associations, foundations and businesses.

Accounting in an NGO: what to read

Do we need to keep books if there were only a few transactions

Yes. The Law on Accounting and Financial Reporting sets no minimum volume of transactions. A non-profit organisation files annual financial statements and the report on the use of income regardless of how many transactions it had during the year.

What if the organisation has already filed nil reports

After restoration we compare the filed reports with the accounting data. Errors in tax reports are corrected with amended returns; errors in financial statements are corrected in the next period’s statements under the national accounting standards.

Can restoring the books affect non-profit status

Restoration itself does not change the status. It shows whether income was used for the purposes in the charter. If there is a problem, the organisation learns about it before the tax authority does and has time to correct it.

Who signs the restored statements if there was no accountant

The head of the organisation and the person responsible for keeping the accounts. If the accounting has been outsourced to an external firm under a contract, this is recorded in the contract and in the accounting policy order.

Can the books be restored while the grant audit is under way

Technically yes, but the auditor will not start without a trial balance for the project. So it is worth finishing restoration at least for the grant funds. If we restore the books, the audit of the same grant is carried out by a different auditor, as independence rules require.

If your books need restoring

Since 2000 we have kept the books for and audited public associations, charitable foundations and grant projects. Tell us the organisation’s registration date, the number of bank accounts and grants, and whether you have employees, and we will tell you where to start. We send a proposal once we have seen the task.