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Financial Statements for Non-Profit Companies (NPC) in South Africa

Last updated: 2026-03-19

NPC financial statements serve a broader audience than those of a commercial company. Beyond CIPC and SARS compliance, NPC financial statements are scrutinised by donors, funders, grant-makers, and the public. Transparency and accountability are paramount — poor financial reporting can damage an NPC's reputation and cut off critical funding sources.

NPCs must prepare annual financial statements in accordance with an appropriate financial reporting framework. Many NPCs use IFRS for SMEs, while smaller organisations may use a simplified framework. The audit/review requirements follow the same PI Score thresholds as for-profit companies, but the DSD may impose additional requirements for NPOs. Some funders also contractually require audited financial statements regardless of the PI Score.

For NPCs with PBO status, financial statements must clearly separate exempt activities from taxable trading activities. SARS needs to verify that the bulk of the NPC's income is being used for approved public benefit purposes. A well-prepared set of financial statements that clearly shows how funds were raised and spent is the best protection against PBO status being questioned.

Key Requirements

Key requirements
Requirement
Annual financial statements per Companies Act
Audit if PI Score ≥ 350 (or if funder/DSD requires)
Independent review if PI Score 100–349
Clear separation of exempt and taxable activities for PBOs
Donor-restricted fund accounting (if applicable)
DSD reporting (if registered as NPO)
Records retained for 7 years (Companies Act)

Important Deadlines

Important deadlines
Deadline
Financial statements: within 6 months of financial year-end
DSD report: within 9 months of financial year-end
Funder reports: per agreement deadlines

Fees & Costs

Fees and costs
ItemAmount
NPC financial statementsR3,000–R15,000
NPC auditR10,000–R50,000
Accounting softwareTypical market costR300–R1,500/month

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Non-Compliance Penalties

Non-compliance penalties
Penalty
Director offence for failure to prepare financial statements
Loss of PBO status if SARS cannot verify exempt activities
Loss of donor confidence and funding
DSD NPO deregistration

Frequently Asked Questions

Does every NPC need an audit?
Not necessarily. The PI Score thresholds apply: audit above 350, review for 100–349, no assurance below 100. However, many funders and the DSD require audited statements regardless. Check your funding agreements and NPO registration requirements.
How should an NPC report restricted funds?
Restricted funds (donor money given for a specific purpose) should be accounted for separately from unrestricted funds. Best practice is to use fund accounting, with a statement of financial activities that shows movements in each fund. This demonstrates to donors that their money was used as intended.
What accounting framework should an NPC use?
Most NPCs use IFRS for SMEs. There is no NPC-specific accounting standard in South Africa, though international standards like IPSAS or the NPO Accounting Guideline can provide useful guidance. The key is consistency and adequate disclosure for your stakeholders.

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