All organizations approved by Charity Monitoring Norway are required to follow the Accounting Guidelines for Organizations Registered with the Fundraising Registry. The guidelines require fundraising organizations to prepare activity statements in accordance with the Accounting Act and NRS (F) Generally Accepted Accounting Principles for Nonprofit Organizations (the standard).

In addition, the guidelines specify some additional requirements. Organizations are required to use an activity-based chart of accounts. This means that the official financial statements must be prepared using an activity-based presentation format. Approved fundraising organizations subject to consolidated financial reporting requirements must also prepare consolidated financial statements according to the activity model.

The auditor must ensure that the Fundraising Control guidelines (including reporting requirements) have been followed in the financial statements prepared by the organization. It is also important that the auditor assess whether the allocation of costs among the various activities is reasonable and consistent over time.

The auditor must ensure that the correct template is used for the auditor’s report so that there is no doubt that the activity statement has been audited. The template for the auditor’s report can be found on page 757 of the 2012 Auditor’s Handbook (Example N6: Standard Report for a Nonprofit Organization That Has Prepared Activity Accounts).

Recurring errors in the reported financial statements:

• The official financial statements have not been prepared in accordance with NRS (F) Generally Accepted Accounting Principles for Nonprofit Organizations
• A species-based income statement has been prepared instead of an activity-based income statement
• No information is provided regarding the accounting principles, including the principles for allocating costs, in the note
• Collection costs are not itemized on a separate line, so it is not possible to calculate the collection rate
• The Fundraising Efficiency, Program Efficiency, and Administrative Ratio for the last 5 years are not disclosed in the note
• There are no comments regarding changes to the collection percentage, the purpose percentage, and the administrative percentage.
• There is no breakdown of costs by type in the note
• The gross changes in equity are not shown in the statement of activities or in the notes
• There is no information regarding what restrictions apply to equity
• The endowment capital of foundations is not listed on a separate line
• No information has been provided regarding transactions with related parties
• The auditor did not use the correct template for the auditor’s report