In accordance with Article 13(4) of the Budget Code of Ukraine No. 2456-VI dated 8 July 2010, financial resources and property (assets) received by budgetary institutions in kind in addition to the general fund budget funds are considered to be the institution’s own revenues of budgetary institutions and are included in the special fund budget.
There are two groups of budgetary institutions’ own revenues:
- Group 1: revenues from payments for services provided by budgetary institutions as prescribed by law;
- Group 2: other sources of the institution’s own revenues.
Each of these groups is divided into subgroups. For instance, the second group includes:
- Subgroup 1: “Charitable contributions, grants and donations”. They are accounted for under the budget revenue classification code 25020100 “Charitable contributions, grants and donations”, approved by the Order of the Ministry of Finance of Ukraine No.11 “On Budget Classification” dated 14 January 2011 (hereinafter referred to as Order 11);
- Subgroup 2: revenues received from companies, organisations, individuals and from other budgetary institutions in order to implement targeted measures, including for the purpose of disposing of privately owned land plots and other real estate. These revenues are accounted for under the code 25020200 “Revenues received by budget institutions from companies, organisations, individuals and from other budget institutions in order to implement targeted measures…” (set out in Order 11).
Selecting the budget revenue classification code depends on the purpose of the charitable aid and how the funds or property received will be used.
- Revenues of Subgroup 1 of the Group 2 are allocated exclusively to support the primary activities of the budgetary institution.
- Revenues of Subgroup 2 are used to implement specific targeted measures.
The type of revenue by classification code is determined at the stage of amending the budget and drawing up the relevant certificate.
Therefore, there are two approaches to recording charitable aid in accounting.
Approach 1
If charitable aid in the form of fixed assets (e.g. vehicles) is provided to support the operations of the institution, cover its economic needs, repair its property or manage its primary or additional activities, the revenue is reflected in the budget under code 25020100 “Charitable contributions, grants and donations”.
In accounting, these fixed assets are recognised in accordance with Clause 7 of Section II of the National Accounting Regulation (Standard) in the Public Sector 121 “Fixed Assets”, approved by Order of the Ministry of Finance of Ukraine No. 1202 dated 12 October 2010.
This includes accounting entries specified in the Standard Correspondence of Accounting Subaccounts for Reflecting Transactions with Assets, Capital and Liabilities by Budget Funds Administrators and State Target Funds, approved by Order of the Ministry of Finance of Ukraine No. 1219 dated 29 December 2015 (hereinafter the Standard Correspondence):
|
No. |
Description of the transaction |
Correspondence of accounts |
|
|
Debit |
Credit |
||
|
1.11 |
Reflecting the value of fixed assets received free of charge (except for internal transfers within the body authorised to manage state (municipal) property) |
1015 “Vehicles”
|
2117 “Other current accounts receivable”, 6211 “Settlements with suppliers and contractors”, 6415 “Settlements with other creditors” |
|
|
At the same time, the following are reflected: |
|
|
|
|
income from fixed assets received free of charge (except for internal transfers within the body authorised to manage state (municipal) property) |
2313 “Registration accounts” |
7511 “Revenues for non-exchange transactions”
|
|
|
increase in contributed capital by the amount of fixed assets received free of charge |
7511 “Revenues for non-exchange transactions” |
5111 “Capital contributed to administrators of budget funds” |
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|
amount of depreciation accrued on fixed assets that were in operation |
5111 “Capital contributed to administrators of budget funds” |
1411 “Depreciation of fixed assets” |
If a budgetary institution receives fixed assets (e.g. vehicles) as charitable aid in kind, it must submit a Certificate of Receipt in Kind to the State Treasury Service by the end of the reporting month (for local budgets, the form is approved by Order of the Ministry of Finance No. 938 “On Approval of the Procedure for Treasury Services of Local Budgets” dated 23 August 2012, Annex 25 to Order No. 938).
In addition to submitting the Certificate, the budget must be amended in the part of the special fund for the institution’s own revenues and all related documents — in accordance with Clause 47 of the Resolution of the Cabinet of Ministers of Ukraine No. 228 “On Approval of the Procedure for the Preparation, Review, Approval and Basic Requirements for the Implementation of Budgets of Budgetary Institutions” dated 28 February 2002.
Approach 2
If charitable aid received by a budgetary institution is intended for further transfer to other institutions, facilities or companies, i.e. it is not allocated to its own needs, it should be attributed to Subgroup 2 of Group 2 of the institution’s own revenues and reflected in the budget under the budget revenue code 25020200 “Revenues received by budget institutions from companies, organisations, individuals and from other budget institutions in order to implement targeted measures…”.
In accounting, these fixed assets are reflected as inventories in accordance with Clause 5 of Section II of the National Accounting Regulation (Standard) in the Public Sector 123 “Inventories”, approved by Order of the Ministry of Finance No. 1202 dated 12 October 2010. They are recorded on subaccount 1815 “Assets for Distribution, Transfer, Sale”, which is used to record assets purchased (produced, received) for the purpose of further distribution, transfer or sale under the Procedure for the Implementation of the Chart of Accounts in the Public Sector, approved by the Order of the Ministry of Finance No. 1219 dated 29 December 2015.
In this case, the following accounting entries should be made:
|
No. |
Description of the transaction |
Correspondence of accounts |
|
|
Debit |
Credit |
||
|
1.11 |
Reflection of the value of fixed assets received free of charge and intended for further distribution, transfer or sale |
1815 “Assets for distribution, transfer, sale”, |
2117 “Other current accounts receivable”, 6211 “Settlements with suppliers and contractors”, 6415 “Settlements with other creditors” |
|
|
At the same time, the following are reflected: |
|
|
|
|
income from fixed assets received free of charge and intended for further distribution, transfer or sale |
2313 “Registration accounts” |
7511 “Revenues for non-exchange transactions”
|
|
|
Attribution of income to financial results in the amount of fixed assets received free of charge and intended for further distribution, transfer or sale |
7511 “Revenues for non-exchange transactions” |
5511 “Fiscal results of the budget execution for the reporting period” |
When receiving fixed assets (vehicles) as charitable aid in kind, provided that they are intended for further distribution, transfer or sale, a budgetary institution should also draw up and submit a Certificate of Receipt in Kind and amend the budget.
