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Accounting Regulation of Civil Not-For-Profit Organization in China
—–issued by China Ministry of Finance (MOF)

China Ministry of Finance (MOF) published Accounting Regulation of Civil
Not-For-Profit Organization (“this Regulation” thereafter) on August 18th, 2004 as an
effort to standardize the accountancy of pr ivate not-for-profit organizations (non-profit
organizations) and to improve the quality of accounting information. This regulation
came into effect on January 1
st, 2005. Later, MOF and Ministry of Civil Affairs (MCA)
together issued a departmental notice, giving local departments of Finance and
departments of Civil Affairs specific instructi ons on how to implement this Regulation.

Provision contained in this Regulation applies to all types of legal private not-for-profit
organizations in China, including social organizations, Foundations and private
non-enterprise units.

The main body of this Regulation is specific technical rules and ways on disposition,
evaluation and disclosure of accounting info rmation. All accounting elements, such as
assets, debts, owner’s equity , inventory, short-term and long-term investments are
covered. It also specifies clear requiremen t on activities like distribution and use of a
non-profit organization’s funds and resource s; compilation of basic statements of
accounts; and disclosure of financial reports . In this sense, this Regulation plays a

basic role in accounting of a non-profit organization which is similar as the adopted
accounting standards in that of a business.

According to this Regulation, accounting principles a non-profit organization shall
adopt in its accounting disposition include those generally accepted accounting
principles; Accounting of a non-profit organization shal l adopt debit and credit
accounting system in their work. All reve nues are recognized when earned and all
expenditures are recognized in the period incurred, without regard to the time of
receipt of payment of cas h. All revenues earned beyond the period shall not be
recognized as revenues of that period, even if paid in the same period; All expenditures
incurred beyond the period shal l not be recognized as expenditures of that period, even
if paid in the same period.

Translated by Hongxin Shi
Email:hxshi2003@yahoo.com