Research On The Performance Accounting Of Not-for-profit Organization

With the intensifying of Chinese market economy system reform, and the transformation of government functions, the not-for-profit and non-governmental organizations, which are between profit organizations and the government, are growing vigorously. Diversified not-for-profit organizations (NPOs), characterized by flexibility, efficiency, understanding and personality, can meet the needs of society. It becomes not only a effective supplement for marketing services and government services, but also a vital power to improve the social governance.The NPOs, grown up with Chinese social background, carry a deep brand of history and society, which means their growth and development are characteristic of Chinese. First and foremost, our country provided services of public welfare to the society in a long period, in a way of running state-owned public institution. The government arranged mode makes the institution into a subsidiary organ of government. Financed by the treasury, under the government budget system, operational and administrative management makes this kind of organizations stray from the features that NPOs should be equipped with. So it’s hard to play its role in the market system. It leads to many problems, such as a low efficiency, lacking of high quality services, poor social credibility and so on, which initiate an urgently calls upon the reformation of our public institutions. Secondly, our privately operated non-profit organizations started late, developed unevenly, had irregularities in both operation and administration, and had a weak power in participating in marketing. Consequently, the organizations need badly of supporting policies and directions of improving inner management system. Thirdly, although in the same position of providing public welfare services, privately operated NPOS and public institutions are under different system frameworks, which causes differences in the construction of resources allocation, operation and management system. This difference is not beneficial to improve the management system of these organizations, and not beneficial to their orderly competition and the sustainable development of social welfare. Consequently, we must do a deep research on these two kinds of organizations, in order to build an equal institution framework, which is suitable for the development of our non-profit organizations. It will optimize the allocation of social resources, and enhance the quality of social welfare services.Due to their existing theory regulations, non-profit organizations exist for the purpose of carrying out their missions. Their organizational goal is diversified. Non-for profit organization lacks of the definite marketing signal because of not making profit, then it is hard to evaluate their performance with the index like profit. With the characters of property right publicly, and resources depending, NPOs are asked to make a performance management, to evaluate the performance and the social effect by using the economy, efficiency and social effectiveness. The performance management of NPOs is required to construct an accounting system which is able to provide overall performance management information and to effectively control the institution performance. The currently accounting system of public institutions and privately operated organizations can not achieve this aim. Thus we need to do a thorough research on the performance accounting of NPOs, in order to serve for improving the not-for-profit organizations’performance.This paper defines the category of Chinese NPOs, which is based on the existence theory of NPOs. By analyzing the organizations’management features and components, the paper proves the necessity to manage their performance. By analyzing both the defect that exists in the accounting system of public institutions and privately operated organizations, and the limit in reference of western countries’ accounting system of NPOs, the paper comes up with a proposal that we construct a performance accounting system of NPOs in our own country. The paper also illustrates that the essence of performance accounting of NPOs is a controlling system by means of information. Furthermore, it expounds the objective and functions of performance accounting, accounting assumptions, accounting subjects, accounting elements and other fundamental theory questions like these. It also designs a model of performance accounting centered on financial accounting. In the financial accounting conceptual framework, It elaborates on performance financial accounting about its goal of financial report and its composition system, the definition of accounting elements and their correlation, recognition and measurement of accounting elements, and the accounting procedures. It puts forward a financial accounting conceptual framework, which makes resources, debts, resources surplus, input, output and effect as the accounting elements, makes accrual basis&cash basis as a dual recognition basis, and makes resource surplus statement and operational performance statement and comprehensive performance statement as the accounting reports. Studies on these is in order to provide information for the users who want to evaluate the performance of not-for-profit organizations.