According to the 5253 Associations Law, which came into force on November 23, 2004, it is mandated that the activities of the association be recorded in the association’s accounting under certain rules. When conducting association accounting, specific items must be considered and should not be overlooked.
What Dates Does the Association Accounting Period Cover?
The association’s accounting period covers a calendar year. The period begins on January 1 and ends on December 31. If a new association is established during the year, the fiscal period begins on the date of establishment and ends on December 31. Following these transactions with an association accounting program is in accordance with the regulation.
How Are the Association's Income and Expenses Documented?
Collection transactions for the association’s income must be documented with an "acknowledgment document." If the income is received through a bank account, documents such as bank statements or receipts issued by the relevant bank can replace the receipt. Association expenses are documented with receipts, retail sales slips, or invoices. For expense compensations related to payments under the Income Tax Law, an expense receipt is issued for other payments.
An "In-kind Help Document" is issued for services and goods delivered by the association to organizations or individuals. Conversely, an "In-kind Donation Receipt Document" is issued for services and goods delivered to the association by institutions, individuals, and other organizations.
How Is an Authorization Document Drawn Up to Collect Income on Behalf of the Association?
The person or persons (excluding members of the board of directors) who will collect income on behalf of the association are determined by a board of directors' decision, specifying the duration of the authorization (maximum 1 year). The "Authorization Document," containing the full identification information, photographs, and signatures of the individuals who will collect income, is issued in two copies by the association. The document becomes valid once approved by the chairman of the board of directors. Expired authorization documents are renewed in the same manner.
Can Associations Engage in Income-Generating Activities?
Associations can engage in commercial activities to obtain the financial resources needed to pursue their objectives. These activities can be carried out as long as there are provisions in their statutes, and they comply with financial legislation. However, associations cannot distribute their income among their members.
Do Associations Need to Open a Bank Account?
There is no legal obligation for associations to have a bank account. However, the amount of cash to be kept in the association's safe is determined by the board of directors, considering the association’s needs.
Should the Money Deposited in the Association’s Bank Account Be Documented?
The association’s income is generally collected with a receipt. However, if the income is collected through the bank, the bank statement or receipt issued by the bank serves as sufficient documentation. Therefore, there is no obligation to issue a receipt for money deposited in the association’s bank account.
How Is the Fee Paid to Persons Working on the Association’s Renovation Documented?
All expenses related to associations must be documented with receipts or invoices. However, under the Income Tax Law No. 193, all payments considered as wages must be recorded with an expense document. If renovation work is performed and an invoice cannot be issued, an expense compass must be arranged by the association. Additionally, withholding tax on the paid fee must be deducted and deposited with the tax authorities.
Are There Penalties Arising from the Association's Transactions?
While the activities of the association are ongoing, fines resulting from errors made by officials in their work cannot be recorded as the association’s expenses. These penalties must be covered by the individual who committed the error.
When Are Transactions Recorded in the Ledger?
All transactions made by associations must be recorded daily in the ledger. However, records of income and expenses can be maintained for a short period without disrupting the accounting order, depending on the transaction's volume and requirements. This period cannot exceed 10 days. For associations that maintain records with documents bearing authorized directors' signatures, such as accounting receipts and payroll documents, the recording period cannot exceed 45 days.
