Mr. Gramoz Ruci, Chairman of the Parliament of Albania
Mrs. Anila Denaj, Minister, Ministry of Finances and Economy
Mrs. Vasilika Hysi, Deputy Chairman of the Parliament and Chairperson of the Subcommittee on Human Rights
Mr. Ulsi Manja, Chairman, Committee on Legal Affairs, Public Administration and Human Rights
Mr. Arben Ahmetaj, Chairman, Committee on Economy and Finances
Mrs. Ogerta Manastirliu, Minister, Ministry of Health and Social Protection; Chairman of the National Council of Civil Society
Mr. Mario Mariani, Head of Co-operation, Delegation of the European Union in Albania
Mrs. Leyla Moses-Ones, Chargé d’Affaires, Embassy of the United States in Albania
His Excellency Mr. Adrian Maître, Ambassador of Switzerland in Albania
His Excellency Mr. Duncan Norman, Ambassador of the United Kingdom in Albania
His Excellency Mr. Johan Ndisi, Ambassador of Sweden in Albania
Her Excellency Mrs. Guusje Korthals Altes, Ambassador of the Netherlands in Albania
Mr. Enton Duro, Director of the General Directorate of Taxation
Mrs. Elira Hoxha, Executive Director, National Accounting Council
Mr. Andi Kananaj, Executive Director, Agency for the Support of Civil Society
Mrs. Eriola Muka, Director, Directorate of Policies and Priorities for Development at the Prime Minister’s Office
Mr. Blendi Dibra, Vice-Chairman of the National Council for Civil Society
Subject: For some clarifications and amendments to the Law “On Accounting and Financial Statements”
We, a group of civil society organizations, have become aware of Law no. 25/2018 “On Accounting and Financial Statements”, through an invitation from the National Accounting Council (NAC) as the designated body for drafting the performance report format that NPOs have to submit to it under the applicable law.
The law was published in the Official Gazette No. 9222 on May 17, 2018 and has entered into force since 1 January 2019. This law has been drafted and approved without the knowledge and participation of the sector and comes to the attention of civil society organizations only at this moment when the process of drafting the reporting formats from the NAC has begun.
The civil society sector itself has many issues that need to be addressed internally. These issues are being discussed at forums across and beyond the sector in order to increase the NPOs functioning standard, the quality of its activity and the increased transparency of NPOs. Proper and unequivocal treatment of NPO financial reporting is essential to their development and is one of the important priorities set out in the Roadmap for the Government Policy Towards more Enabling Environment for Civil Society Development 2018-2022, a Strategic Document for the development of the sector.
Law no. 25/2018 “On Accounting and Financial Statements” brings some new changes and additions to the reporting of non-for-profit entities, which are a concern and a step backwards regarding the reporting of civil society organizations.
Specifically, the issues of concern are listed as follows:
This change represents a step backwards in creating an enabling environment for NPOs in the country, not taking into consideration the (non-profit) nature of the work, and the size of NPOs. This change contradicts even the best practices in this regard.
According to the description in paragraphs 1 and 2 of Article 17 of the law, on the content of this report, and also the preliminary discussion on the format of this report, it seems to be not in compliance with the non-profit nature and activity of NPOs.
BUT, the main concern with this request is related to the motivation and need of lawmakers to assess the performance of these organizations, which for the sake of legal definition are the largest organizations in the country whose focus is human rights protection; monitoring, evaluating and denouncing of corruption cases at all levels of the state; monitoring of the elections and advancing the legal framework in this regard, etc.
Performance assessment at a time when these organizations are not contractually and financially related to the state, said otherwise when they do not use state funds or receive tax and financial reliefs, makes it unjustified. Moreover, this is considered to be a violation of the freedom and independence of the non-profit sector.
The requirement for the preparation and publication of the organizations’ performance report becomes even more odd when it is not determined which is the appropriate institution to assess this performance; which is the Albanian or international standard to assess the performance against, and eventually make judgement on its conformity; which are the penalties for organizations that do not meet the performance standard.
All these questions make this requirement of the law pose a high potential risk for state intervention in the independent activity of the non-for-profit sector.
In accordance with the existing legal framework, NPOs prepare and submit financial statements to tax authorities and are subject to ongoing monitoring by them. They also submit activity reports directly to donors and public institutions from which they receive funding, in accordance with the relevant rules and procedures. Western practice, including some Western Balkan countries, includes the requirement to produce an annual activity report and provide public access (in any form, but not determinant on the official website). But this is only about those organizations that have the status of “For Public Benefit” and those who benefit from public funds.
This obligation is an added burden to civil society organizations, especially those from outside Tirana, that will have additional costs to present their financial reports and other documents that the law provides, to the Tirana District Court.
On the other hand, this demand does not bring any added value in terms of sector transparency, public access or facilitation of control and monitoring by relevant institutions. The court does not have an institutional mandate to manage or use this type of information. While the financial statements are submitted by non-profit organization in the Regional Taxation Directorates like any other entity, this new requirement of the law is unjustified. Any need for information both for institutional and public needs can be accomplished by these Directorates. Moreover, the Tirana District Court has failed in these nearly 20 years to produce an accessible electronic register for the non-profit sector in the country.
Thus, the law force NPOs to have official websites, while this is not a legal obligation envisaged by the legal framework for the registration and operation of NPOs, as it is not a legal obligation for the vast majority of profit-making entities.
Honorable representatives of state institutions and donors supporting the non-profit sector, we remain committed to strengthening our public communication and transparency as an important tool in strengthening public trust. We find that voluntary self-regulation in the form of the Code of Standards is one of the forms to strengthen this transparency to the public. But any legal regulation that tends “to grade” the quality of the non-profit sector’s work from state institutions would be interfering in its activity.
Considering the above, in the name of the signing organizations, we ask:
Thank you in advance for taking into consideration our request.
(in alphabetical order)
Albanian Center for Population and Development (ACPD)
Albanian Disability Rights Foundation (FSHDPAK)
Albanian Helsinki Committee
Albanian Institute of Science (AIS)
Albanian Local Capacity Development Foundation
ARSIS, Social Organization for Youth Support
Balkan Investigative Reporting Network – BIRN Albania
Center for Rights at Work
Center ACT FOR SOCIETY
Civil Rights Defenders – Albania
Co-PLAN Institute for Habitat Development
Dorcas Aid International Albania
Gender Alliance for Development Centre
Help the Life Association
Initiative for Social Change (ARSIS)
Institute for Democracy and Mediation (IDM)
Institute for Development and Research Alternatives (IDRA)
Open Society Foundation in Albania (OSFA)
Observatory for Children and Youth Rights
Partners Albania for Change and Development
Resource Environmental Center – Albania
Roma Active Albania
Save the children – Albania
Tirana Legal Aid Society (TLAS)
Tjeter Vizion NGO
Terre des Hommes
Urban Research Institute (URI)
Useful to Albanian Women
“Vatra” Psycho-Social Centre
World Vision Albania
Note: The contact point for this issue is Partners Albania for Change and Development at @resourcecentre.al or tel: 04 2 2540881