21 April 2020

Association Accounting

Gürkan Akın
| Blog
Association Accounting

According to the 5253 Associations Law, which entered into force on 23.11.2004, it was reported that the activities of the association should be kept under the accounting of the association within certain rules. While doing association accounting, some items should be considered and should not be ignored.

What dates does the association accounting period cover?

Association accounting period covers a calendar year. The accounting period is started from January 1, the end is December 31. If there is a new association status established during the year, the fiscal period begins as of the date of establishment and ends on 31 December. Following these transactions with an association accounting program is in accordance with the regulation.

How is the association's income and expenses documented?

Collection transactions for the income of the association should be made with an "acknowledgment document". If the income of the association is made through a bank account, documents such as bank statements or receipts issued by the relevant bank also replace the receipt. Association expenses and expenditure documents such as receipts, retail sales receipts or invoices. On the other hand, expense compensation for payments under the Income Tax Law; for other payments, an expense receipt is issued.

An "In-kind Help Document" is issued for the services and goods delivered to the organization or individuals by the association. On the other hand, "In-kind Donation Receipt Document" is issued for the services and goods delivered to the association by the institution, persons and other organizations.

How is an authorization document drawn up to collect income on behalf of the association?

The person or persons (excluding the members of the board of directors) who will collect income on behalf of the association are determined upon the decision of the board of directors, provided that the duration of the authorization (maximum 1 year) is also specified. In this context, the "Authorization Document" containing the clear identification information, photographs and signatures of the individuals who will collect income is issued in two copies by the association. The certificate of authorization becomes valid once the association is approved by the chairman of the board of directors. Authorization documents that expire are renewed in the same way.

Can associations engage in income generating activities?

Associations can carry out commercial activities in order to obtain the financial resources they need in line with their study subjects and objectives. The commercial activities can be carried out provided that there are provisions in their statutes and they fulfill the provisions of financial legislation. However, associations cannot share their income among their members.

Do associations need to open a bank account?

There is no obligation in the relevant legislation for associations to have a bank account. However, the amount of cash that should be kept in the association's safe is determined by the board of directors, taking into account the needs of the association.

Should the money deposited in the bank account of the association be documented?

Revenues of the association are collected with a receipt. However, if the association's income is collected by the bank, it is accepted as the bank statement issued by the bank or receipt receipt document. For this reason, there is no obligation to issue a receipt for the money deposited in the association's bank account.

How is the fee paid to the persons working in the association's renovation works documented?

All expenses belonging to associations are made with documents showing expenses such as retail vouchers or invoices. However, in accordance with the Income Tax Law No. 193, all payments within the scope of the wage are recorded on condition that an expense document is issued. Thus, if the association has done the renovation work, if the invoice cannot issue an invoice, it is necessary to arrange an expense compass by the association. In addition, the withholding tax of the paid fee is deducted and deposited at the cash desk.

Are the penalties arising from the association's transactions?

While the activities of the association continue, the fines to be paid due to the defects committed by the officials in the works and transactions cannot be recorded as the expenses of the association. These penalties can only be met by the person who committed the defect.

When are the transactions recorded in the ledger?

Every transaction made in associations is recorded daily in the book. However, records of income and expenses can be kept for a period of time in a way not to disturb the accounting order in accordance with the requirements and volume of the transaction. However, this period cannot exceed 10 (ten) days. On the other hand, associations that make their records with documents bearing the signatures of authorized directors such as accounting receipts and payroll documents cannot be delayed more than 45 (forty five) days.