Non-Government Organizations (NGOs)
Questions
1. Define NGO. Describe different types of NGOs.
2. Briefly explain the legal environment of NGOs in Bangladesh.
3. What is the purpose of NGOs? Explain the governance structure of NGOs in Bangladesh.
4. How the accountability of NGOs is linked with financial reporting.
5. Explain the concept of Fund Accounting. Explain the different types of funds for not-for-
profit organizations.
6. What type of restrictions can donor or foreign aid agencies impose on the donation or aid?
Why are these restrictions imposed by the donors or foreign agencies?
7. Explain how the budget helps to prepare the chart of accounts of the NGO.
8. How does an NGO execute day-to-day activities through the use of funds?
9. State the different sources of funding for NGO. Explain how the sound accounting and
reporting system of the NGO helps to get funds from donors.
10. Explain the recording and reporting system of the NGO.
11. Mention the steps of preparing a chart of accounts for an NGO project of NGO. Prepare a
Chart of Accounts for a women empowerment project of an NGO, taking imaginary head of
revenues, expenses, assets, liabilities and funds.
Problem-01
Osaka, an NGO, is operating its activities in Nigeria, Argentina, Africa, Sri Lanka, and Nepal. It
uses the fund accounting to record all of its financial transactions. Under the principle of fund
accounting, it maintains its net assets under unrestricted and temporary restricted categories. The
Trial Balance of Osaka in Nepal on 31st December, 2025 is given below:
Trial Balance
31st December, 2025
Accounts Title Dr ($) Cr ($)
Supplies 10,000
Investment 30,000
Equipment 40,000
Unrestricted Net Assets 10,000
Accounts Payable 30,000
Mortgage Payable 40,000
Total 80000 80000
The following economic events incurred throughout the year 2025:
1. Government grants received for social welfare purpose $ 20,000.
2. $10,000 of government grants has been spent on social welfare.
3. Contribution received from the donor $ 30,000.
4. Donation received from the foreign agency $70,000.
5. $25,000 has been spent for rural area development.
Required:
a. Record the economic events for the year 2025 under the principles of fund accounting.
b. Prepare an Income Statement for the year ended December 31, 2025
c. Prepare a Balance Sheet as on 31st December, 2025.
Solution:
(a) Journal Entries:
1.
(i) Cash-Restricted-----------Dr. 20,000
Government Grant Revenue-Restricted--------Cr. 20,000.
(ii) Government Grant Revenue-Restricted--------Cr. 20,000.
Restricted Net Assets/Fund--------------------------Cr. 20,000
2.
(i) Social Welfare Expenses-------Dr. 10,000
Cash-Restricted-------------Cr. 10,000
(ii) Restricted Fund-----------------Dr. 10,000
Release from Restriction----------Cr. 10,000
(iii) Release from Restriction a/c-----------Dr. 10,000
Social Welfare Expenses-----------------Cr. 10,000
3.
(i) Cash------------Dr. 30,000
Contribution Revenue---------Cr. 30,000
(ii) Contribution Revenue --------Dr. 30,000
Unrestricted Net Assets/Fund----Cr. 30,0000
4.
(i) Cash-------------Dr. 70,000
Donation Revenue (Foreign)-------Cr. 70,000
(ii) Donation Revenue(Foreign) --------Dr. 70,000
Unrestricted Net Assets/Fund----Cr. 70,0000
5.
(i) Program Expenses-Rural Area Development---------------Dr. 25,000
Cash------------------------------------------------------------------Cr. 25,000
(ii) Unrestricted Net assets----------------Dr- 25,000
Program Expenses-Rural Area Development---------------Cr. 25,000
(b)
Osaka
Statement of Income and Expenditure
For the Year Ended December 31, 2025
Restricted Unrestricted Total
Revenue:
Government Grant 20,000 20,000
Contribution Revenue 30,000 30,000
Donation Revenue 70,000 70,000
Total Revenue 20,000 100,000 120,000
Expenses:
Social Welfare Expenses 10,000 10,000
Rural Area Development Expenses 25,000 25,000
Total Expenditure 10,000 25,000 35,000
Surplus over Expenditure 10,000 75,000 85,000
(c)
Osaka
Balance Sheet
at December 31, 2025
Assets: Tk.
Cash 85,000
Supplies 10,000
Total Current Assets 95,000
Investment 30,000
Equipment 40,00
Total Non-Current Assets 70,000
Total Assets 165,000
Liabilities & Net Assets
Accounts Payable 30,000
Mortgage Payable 40,000
Total Liabilities 70,000
Net Assets:
Unrestricted Net Assets 85,000
Restricted Net Assets 10,000
Total Net Assets 95,000
Total Liabilities and Net Assets 165,000
Equipment
Unrestricted Net Assets A/C= 10,000+30,000+70,000-25,000= 85,000
Restricted Net Assets A/C= 0+20,000-10,000= 10,000
Cash a/c= (20,000+ 30,000+70,000-10,000-25,000) = 85,000
Problem-02
# HAS is an NGO working to prevent and care of HIV/AIDS in Bangladesh. The trial balance of
HAS at December 31, 2025 is given below:
HAS
Trial Balance
December 31, 2025
Accounts title Dr. (Tk.) Cr. (Tk.)
Donation A/C:
International HIV Alliance 15,00,000
OXFAM Novib 5,15,000
UNICEF 10,00,000
Office Furniture 2,00,000
Office Equipment 1,00,000
Cash 1,10,000
Bank A/C 2,00,000
Unrestricted Fund 9,00,000
Temporarily Restricted Fund 1,00,000
Salary Payable 40,000
Accounts payable 25,000
FDR 600,000
Interest Income 25,000
Other Donation & Grant 50,000
Audit fee 10,000
Medical Treatment cost 7,00,000
Medicine 12,00,000
Awareness Program Expenses 4,00,000
Transportation Expenses 3,00,000
Salary Expenses 1,00,000
Rent Expenses 1,00,000
Stationery Expenses 1,00,000
Publicity and fund-raising expenses 20,000
Miscellaneous Expenses 15,000
Total 4,155,000 4,155,000
Adjustment data:
(i) At Jan 1, 2025, the HAS has medicine worth Tk 100,000 as stock. The company uses
the periodic method to record the stock. Beginning stock was included in the
medicine account. The closing stock of medicine is 200,000.
(ii) During the year, the company implemented two projects, and one project is in
progress. Under the agreement with the donor, any surplus funds from the completed
project can be used by the NGO for other uses. However, there is a temporary
restriction on the project that is in progress. The fund remained unused in this project
at the year-end, is Tk. 70,000. There is no other restricted fund at the end of the
reporting period.
(iii) During the year, HAS received free medicine from Japan Government. The value of
medicine was Tk. 300,000. No entry was given for this in-kind donation. There is no
restriction by the donor on this donation.
(iv) HAS charges 10% depreciation on all of its fixed assets.
Required: Prepare a statement of Income and Expenditure account for the year ended Dec. 31,
2025 and a Balance Sheet at Dec. 31, 2025.
Problem-03
Padda is an NGO provides aids to affected people. Padda mainly depends on aid from donors for
its activities. Currently Padda has two projects- Rohinga Free Medical Treatment and Rohinga
Skill Development Program. Both of the projects are funded by Foreign donors who imposed
restrictions on use of fund only to the project purpose. Padda requires to report the progress of
the project both in cost and activities. For the purpose of reporting to donors, Padda maintains
three set of ledgers with distinct chart of accounts- two for each project and one for Paddas own
assets. The balances from ledgers books are given below:
Accounts Title Own Balances RFMT RSDP
Cash 50,000 150,000 240,000
Property Plant & Equipment