Almost half of the Dutch population are members of two or more interest groups or associations....
Annual Reporting Guidelines (RJ 640)
Interest groups must periodically render account to their main stakeholders for their actions. An important annual accountability document are the financial statements, which includes the directors’ report. It is therefore important that you, as an interest group, are familiar with the applicable annual reporting guidelines, the changes in this regard and what impact their application has on your organisation.
The Dutch Accounting Standards Board has specifically introduced Annual Reporting Guidelines (RJ) 640 for ‘Not-for-profit organisations’ for interest groups. These guidelines are usually applied to foundations and associations. It is not the primary objective of an interest group to make a profit, as it pursues a social purpose or general benefit.
It may happen that an interest group will develop revenue models of a commercial nature through the provision of products and / or services. If the proceeds from this exceed €6 million (50% of the turnover criterion for medium-sized group qualification), RJ 630 for ‘Commercial foundations and associations’ must be followed and Part 9, Book 2 of the Dutch Civil Code will therefore apply. The directors’ report is an important tool for the interest group to render account of itself substantively and otherwise. This is because the nature of the activities means that the social significance of those activities is only evident from the financial statements to a limited degree. Apart from the RJ 400 Directors’ report, RJ 640 makes a number of recommendations for the structure of the directors’ report in the case of an interest group.
The group also sometimes qualifies as a fundraising organisation. In this situation RJ 650 for ‘Fundraising organisations’ applies, but RJ 640 is also fully applicable, unless RJ 650 differs from it.
If the interest group uses RJ 640, the other firm statements of the Annual Reporting Guidelines must also be applied. This is because these provisions are accepted accounting principles.
The extensiveness of the reporting will also depend on the specific nature of the organisation and its extent and complexity. The information needs of the user group and their position in relation to the organisation are also important in this regard. The assessment of costs and benefits (relevance to users) has an important part to play here.
The interest group’s annual reporting may be subject to specific legislation or regulations and grant conditions. The specific legislation and regulations and the grant conditions must take precedence over the firm statements in this chapter and / or the other chapters of the guidelines.
Mazars can help you with:
- Using the RJ 640 reporting guidelines correctly in different situations
- Problems classifying equity components, such as the distinction between special-purpose reserves and designated funds and their correct processing
- Assessing the inclusion of information relevant to users
- Contributing ideas towards the formulation of the risk section of the directors’ report
- Establishing whether the directors’ report complies with RJ 640
Want to know more?
Would you like to know more about the Annual Reporting Guidelines (RJ 640)? Please contact Jaap Rauw by email or by telephone: +31 (0)88 277 19 70 or Bart Achterberg by email or by telephone: +31 (0)88 277 19 92. They will be happy to help you.