Short answer
The standard for nonprofit organizations adapts accounting for an entity that has no owners and does not distribute profit. The concepts are the same as those of businesses, but equity is replaced by net assets and profit by the change in net assets.
| Who enforces it? | Foundations, associations, centers, parties, religious institutions, trade unions |
| Mirrors | Financial position, statement of activities, cash flow, notes |
| Instead of capital | Net assets, divided into restricted and unrestricted |
| Instead of profit | Change in net assets |
| The Basics of Accounting | It depends on the size; see the 5,000,000 lek threshold in paragraph 26. |
| Volunteer work | It is not recognized as income, except in limited cases. |
| Performance report | Liability of over 30,000,000 lek in assets or income, Article 22, paragraph 3. |
Verified on November 8, 2026 by Andi Haxhillari, Certified Accountant. Compared with the text of the SKK for NGOs, effective January 1, 2016, paragraphs 1 through 101, with the KKK guide for the Performance Report, June 2020, and with Law No. 25/2018, Articles 3, 13, and 22.
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The standard specifies how the financial statements of a nonprofit organization are prepared for accountability to donors, members, and creditors.
The general concepts are the same as those of profit-making units, except where the standard explicitly states otherwise. And it does state otherwise in some places that have practical consequences.
It applies to nonprofit organizations operating in Albania: foundations, associations, centers, political parties, religious institutions, trade unions, and other organizations, domestic or foreign.
The field of application requires five concurrent conditions: a distinct legal identity, a charitable or altruistic purpose, a prohibition on engaging in profit-making economic activity, a ban on distributing surpluses, and no government control.
Organizations or their activities that are governed by a special law are excluded.
Three things change their name and their content, and that's precisely where mistakes arise.
There are no owners, so there is no equity. The difference between assets and liabilities is called net assets, and it is divided into restricted and unrestricted based on the donor's designation.
The term "profit" is not used. Instead, the change in net assets is used, which is the difference between the beginning and ending balances of the period. It must reconcile with the statement of financial position.
It separately presents the changes in restricted and unrestricted net assets, which is the first information a donor looks for.
The standard establishes a split in paragraph 26. Organizations with an activity code or revenue code exceeding 5,000,000 lek apply accrual accounting for recognized rights and obligations and prepare all statements.
Below that threshold, accounting is applied on a monetary basis, and only the statement of cash flows is prepared with notes on the types of activities.
The condition is "or," so it's enough for one of the two numbers to exceed the threshold.
A contribution is an unconditional, non-reciprocal, and voluntary transfer of assets. It is recognized as income in the period it is received and measured at fair value.
Promises to pay are recognized only with verifiable documentation. Unconditional promises involving payments in future years are generally treated as contingent and measured at the present value of the cash flows.
Conditional promises are recognized only when the conditions are substantially met, not when the agreement is signed.
Volunteer work is not recognized as income. The only exceptions are services that create or add non-financial assets, or that require specialized skills which the organization would have to purchase if they were not donated.
An association receives a grant of 3,000,000 lek in December, on the condition that the money be used for a training program during the following year.
A contingent grant is not recognized as revenue in December. It is recognized when the condition is substantially met, that is, during the following year, while the training is conducted.
If the same grant were unconditional but restricted to training use, it would be recognized immediately as income, but as an increase in restricted net assets, not unrestricted ones.
The difference between a condition and a limitation is the difference between ignorance and knowledge. It is only found in the agreement with the donor.
The performance report is not part of this standard. It is a separate document, approved by the National Council of Accounting in June 2020, pursuant to Article 22(3) of Law No. 25/2018.
The obligation applies to organizations whose assets or revenues exceed 30,000,000 lek. The report is published together with the annual statements on the organization's website.
It is prepared by management, approved and signed by the supervisory board or an equivalent body. It has five chapters: objectives and activities, achievements and performance, financial reporting, structure and governance, and other matters of interest.
The achievements chapter is the only place that describes the role of unpaid volunteers, precisely because that contribution does not appear on the financial statements.
The first mistake is recognizing the conditional grant in the year the funds are received. The condition postpones recognition, even though the money has been credited to the account.
The second mistake is not separating net assets. Without distinguishing between restricted and unrestricted assets, the donor doesn't realize how much money is truly available.
The third mistake is evaluating volunteer work as income. As a rule, it is not recognized.
The fourth mistake is using business vocabulary. Profit, capital, and income statement are not the right terms for a nonprofit organization.
The fifth mistake is overlooking the performance report that organizations are required to submit. It is a legal obligation, not a voluntary best practice.
Yes, the obligation to deposit within seven months from the reporting date applies equally. Organizations above the 30,000,000 lek threshold also publish on their website.
As a contribution, measured at fair value at the time of receipt. If there is a condition, it is recognized when the condition is met.
The condition gives the donor the right to demand the money back if something doesn't happen. The limitation simply specifies what the money is used for. The condition defers recognition; the limitation does not.
Yes, the standard allows it, provided that the policy is applied consistently from year to year and disclosed in the financial statements and notes.
By function: service programs, general management, fundraising, and membership. Health and welfare volunteer organizations also provide classification by nature.
This standard bears an effective date of January 1, 2016, and has not been updated since Law No. 25/2018. Paragraph 7(a) still refers to Articles 9 through 12 of Law No. 9228, which has been repealed.
Similarly, the threshold of 5,000,000 lekë in paragraph 26 comes from that 2016 text. Before classifying a specific organization, that threshold must be verified against the official source, as it may have been exceeded by the new framework.
Accounting Standards for Not-for-Profit Organizations, effective for periods beginning after January 1, 2016, adopted by the National Council of Accountants.
Law No. 8788, dated May 7, 2001, on nonprofit organizations, for the definition of the organization itself.
Law No. 25/2018 “On Accounting and Financial Statements,” Article 3(8) on the definition of the nonprofit entity, Article 13(5) on its financial statements, and Article 22(3) on publication and the performance report.