The third sector comprises a group of private non-profit organizations that provide services of common interest, representing a hybrid choice between government action (the first sector) and private enterprise (the second sector).
Funding is one of the greatest challenges faced by non-profit organizations. Although they are private law institutions, they do not generate profit at the end of the month and, while they carry out activities aimed at promoting societal well-being, they do not always have access to public resources. This is why accounting for the third sector has become so important: these entities often depend on government or corporate resources and need to demonstrate their reliability.
Beyond the importance of evidencing the appropriate use of public or private resources allocated to non-profit entities, third sector accountants also ensure that these institutions maintain their benefits, such as exemption from COFINS and IRPJ, and the payment of only 1% PIS on payroll. Accounting is therefore important not only for securing new resources, but also for safeguarding the interests of these entities.
ITG 2002 (R1) is the standard that regulates accounting for third sector entities in Brazil, covering social assistance bodies, religious organizations, political parties, trade unions, cultural entities and others.
According to the original text, its objective is “to establish specific standards and procedures for the valuation, recognition of transactions and equity changes, structuring of financial statements and minimum disclosure of information in explanatory notes for non-profit entities”.
In the third sector, accounting follows the corporate structure defined by the Brazilian Corporations Law (Law 6.404/1976), with certain adjustments, primarily in terms of terminology.
In the financial statements of non-profit entities identified by the NBC, net assets replace the term share capital, although the equity equation remains the same.
Under NBC rules, accumulated profits or losses are referred to as surplus or deficit for the period, given that results are not distributed to shareholders.
