In the case of NGO XYZ, the cooperation with their donor ABC causes challenges in the area of accounting. More specifically, problems in connection with personnel expense calculations and overhead rates, as well as requirements concerning accounting evidence and procurement policies raise the most frequent questions. Therefore, the objective of this thesis is to analyze the gap between the accounting requirements in the Swiss and the international environment, which are affected by accounting standards, local laws, and industry practices.

The focus of this thesis was set particularly to the projects by donor ABC. Based on qualitative methods such as interviews and enquiries at NGO XYZ, the gap analysis was used to assess the differences between NGO XYZ's current state and their target state, which is meeting the accounting requirements for international project reporting to donor ABC. Consequently, recommendations for future contract negotiations and guidelines for employees were issued based on the identified gaps in the analysis.

The results of this thesis revealed that the gaps in the identified problem areas are derived from different practices and too strict requirements which lead to inefficiencies and uncertainties on the part of NGO XYZ. The accounting standards merely provided a few helpful principles, which could potentially be transferred and used in negotiations. Based on overlaps between the contractual agreement of the two entities and local laws and the similarities between industry practices and the contractual agreement, one can conclude that local laws and industry practices were the more influential factors with regards to the research question than the accounting standards. The client benefits from the findings in the form of recommendations for future contract negotiations, aimed at decreasing inefficiencies, and guidelines in the operational context for swisspeace employees, which provide direction in areas where uncertainties prevail.