Annual accounts of an Austrian private foundation: preparation, audit and submission

The accounting process starts with the books of the private foundation. They must make transactions, assets, liabilities, income and expenses traceable. The company law provisions incorporated by section 18 of the Austrian Private Foundations Act determine which recognition, valuation, presentation and additional disclosure rules apply in the particular case.

The closing process includes the annual accounts and the management report. Depending on the applicable company law rules, further components and disclosures may also have to be prepared. A simple asset overview for the foundation board is not a substitute for statutory accounting.

The file should also contain the relevant foundation declaration, resolutions, valuation records, agreements, loan documentation and evidence of distributions. These records are not all part of the annual accounts. They may nevertheless be necessary to audit the accounts and the description in the management report.

Section 18 of the Austrian Private Foundations Act expressly requires the management report to address fulfilment of the foundation purpose. A general statement that the foundation pursued its purpose is not enough. The report should describe the material purpose-related activities of the financial year and make their connection with the foundation declaration understandable.

Depending on the foundation, relevant matters may include the management of shareholdings or real estate, specific support measures, distributions, loans or other purpose-related activities. The description must match the figures and resolutions. Contradictions between the management report, annual accounts and body minutes make the audit more difficult.

The purpose-related part of the report is not a tax assessment and does not replace a separate review of whether an individual distribution was permissible. The annual closing process must document the foundation’s activities during the reporting year completely and consistently.

The foundation board should first close the reporting period, identify all postings and resolve open transactions. This includes, in particular, services not yet invoiced, receivables, liabilities, valuations and cut-off items. The applicable accounting rules and the available evidence determine the specific treatment.

The annual accounts and management report must then be reconciled. Each material figure in the management report should be traceable to the books or to a reliable supporting record. Purpose-related activities should also be listed in an organised way so that their treatment and decision basis remain clear.

Before delivery, missing evidence and open questions should be recorded. An incomplete data set may be supplemented later, but it affects the significance of the delivery date and leads to further requests. The board should therefore keep a complete delivery list and a chronology of supplements.

Under section 21(1) of the Austrian Private Foundations Act, the foundation auditor must audit the annual accounts, including the accounting records and management report, within three months from presentation. The period therefore runs from delivery of the records and not automatically from the end of the financial year.

For the board, the actual contents and date of delivery are decisive. If only selected figures or a preliminary draft are supplied first, the foundation should not treat the event as a complete presentation without further documentation. A delivery list with date, version and later supplements creates clarity.

The three month period is the statutory audit period. It does not replace internal planning for bookkeeping, preparation and approval. The later the complete records are delivered, the later the audit can begin. Questions and requests for additions should be answered and dated in the file.

Section 21(3) of the Austrian Private Foundations Act requires the audit report to be presented to the other bodies of the private foundation. The report and audit opinion are therefore not merely documents for internal filing. The relevant bodies must assess the findings within their respective roles.

The audit report must be distinguished from the annual accounting records. It documents the outcome of the audit, but does not replace the books, annual accounts or management report. Presentation to the other bodies must likewise be kept separate from any other possible declaration or filing obligation.

If the foundation auditor and another foundation body disagree about the interpretation or application of statutory provisions or the foundation declaration, section 21(4) PSG provides for a court decision on application by a foundation body. Mere dissatisfaction with a critical audit result is a different matter.

The article on appointment and independence of the foundation auditor explains the auditor’s role. A specific error allegation is a separate question addressed in foundation auditor liability.

Beneficiaries have a separate information route under section 30 PSG. Subject to the statutory requirements, it includes information about fulfilment of the foundation purpose and inspection of, among other things, the annual accounts, management report and audit report. This right is distinct from presentation of the audit report to the other foundation bodies.

For the foundation, this means that the accounts, management report and audit report must be organised and retrievable. A request should be handled by checking the current beneficiary status, the relevant period and the records specifically requested. The article on beneficiary information rights explains the requirements and the further route where inspection is refused.

The information right does not make a beneficiary an additional audit body. The statutory audit remains the task of the foundation auditor. The board should nevertheless maintain the accounting file in a complete, consistent and accessible form from this perspective as well.