Non-profit management

Cost accounting in a French association

Cost accounting (comptabilité analytique) is not, as such, a legal requirement for non-profit associations (associations) in general. In practice, however, it becomes essential as soon as an association has to account for the use of funds restricted to a specific project. In some cases, the law even requires an analysis by purpose that comes very close to cost accounting.

Cost accounting is not a general legal requirement

The general accounts of associations, governed by regulation no. 2018-06 of 5 December 2018 of the French accounting standards authority (Autorité des normes comptables, ANC), show the assets and the result of the association as a whole. No text, however, requires an association to keep accounts by project, activity or section in all circumstances. Unlike general accounting, cost accounting remains a management tool, set up on the initiative of the association's officers to inform their decisions.

When does it become essential in practice?

• Once a public grant exceeds €23,000 for the year, an agreement between the public authority and the association is mandatory, under decree no. 2001-495 of 6 June 2001.
• Any grant restricted to a specific action requires a financial report (compte rendu financier, Cerfa form no. 15059), prepared for each funded action and showing how the funds received were used, in accordance with the order (arrêté) of 11 October 2006.
• A multi-year objectives agreement (convention pluriannuelle d'objectifs, CPO), concluded for two to four years, means tracking use of the grant financial year by financial year, in order to determine the unused portion to be recorded as dedicated funds (fonds dédiés), in accordance with ANC regulation 2018-06.
• A multi-activity association, funded by several partners with different requirements, can no longer rely on general accounting alone to allocate each item of income and expense to the relevant activity, section or project.

The annual statement of use of resources: an analysis by purpose required by law

Associations that appeal for public fundraising and collect more than €153,000 in donations in this way must prepare an annual statement of use of resources (compte d'emploi annuel des ressources, CER), under article 4 of Act no. 91-772 of 7 August 1991 and decree no. 2019-504 of 22 May 2019, a threshold that applies to financial years ending on or after 1 June 2020. Its presentation follows the order (arrêté) of 22 May 2019, which applies to financial years beginning on or after 1 January 2020. This document requires the uses funded by public fundraising to be broken down into three main categories: social missions carried out, fundraising costs and operating costs. This breakdown by purpose, presented to the association's general meeting, amounts to true cost accounting required by law. It is the only real exception to the principle that cost accounting otherwise remains voluntary.

Setting up cost accounting: the method

The right starting point is the reporting obligations (a financial report for each funded action, a CER where applicable). The cost accounting plan is then built as a mirror of the budget voted by the board of directors, without needless complexity:

• Define the axes of analysis: by project or action, by funder and, where relevant, by establishment or line of activity. Each funded action becomes a cost section.
• Charge directly whatever can be charged directly: an employee assigned to a project or an invoice incurred for a specific action is recorded in the right section from the outset.
• Allocate shared costs using simple keys: time spent (timesheets) for shared salaries, floor area occupied for premises, headcount or budget weight for overheads.
• Document the chosen keys in a procedure note and keep them constant from one financial year to the next: this is what makes the allocation defensible to funders and verifiable by the statutory auditor (commissaire aux comptes).

A worked example

An association runs two funded actions, an employment integration workshop funded by the municipality (€40,000) and a multi-year programme funded by the State under a CPO (€60,000 a year), alongside its own activity, funded by membership fees. Direct costs (staff delivering the work, equipment) are charged to each action. The annual rent of €18,000 is allocated by floor area occupied: 30% to the workshop, 50% to the programme, 20% to operations. The coordination post (€42,000 including social charges) is allocated using timesheets: 25%, 60% and 15%. At the year end, the programme's financial report shows €58,200 used out of the €60,000 paid. The unspent €1,800 is recorded as dedicated funds under liabilities on the balance sheet, in accordance with ANC regulation 2018-06, and carried forward to the next financial year.

The statutory auditor's role

Where an association is required to appoint a statutory auditor, notably above €153,000 of public grants or of donations giving a tax benefit, the auditor audits the annual financial statements and, where applicable, checks that the CER is consistent with the general accounts and supporting documents. Well-organised cost accounting, set up in advance, makes this check considerably easier and secures the justification of restricted funds to funders.

Frequently asked questions

Must a small association keep cost accounts?

No text requires it in general. In practice, the need arises with the first restricted grant: as soon as a financial report has to be produced, you must be able to isolate the costs and resources of the action concerned.

What is the difference between general accounting and cost accounting?

General accounting, which is mandatory, gives an overall view: assets, result, notes. Cost accounting re-cuts the same entries by purpose (project, action, funder) to answer a question that general accounting ignores: what does each activity really cost, and what resources fund it?

What tools should be used?

Common accounting software for associations handles axes of analysis natively. For a small organisation, a rigorous spreadsheet, reconciled to the general accounts at each year end, is often enough. What matters is consistency in the charging rules, not the tool.

Our approach at audit france

audit france supports associations in structuring their cost accounting and in the consistency of their CER, in connection with its audit of the financial statements. The signing partner remains the sole contact throughout the engagement.

Why choose audit france

A 100% digital firm dedicated solely to statutory audit, registered with the Haute Autorité de l'Audit (H2A) and a member of the Compagnie Nationale des Commissaires aux Comptes (CNCC) and working across mainland France and the French overseas territories.

This page is a practical guide in English, for information only. It is not legal advice, and only the French texts have legal force. Check the version in force for your own situation.