GASB
authority over government related not-for-profits (owned/controlled by a governmental entity on the state/local level)
FASB
private not-for-profits (non-governmental)
FASB 116
requires contributions including unconditional promises to give (pledges) to be recorded as revenue when the promise is made, not when collected [ pledges receivable] (must have a pledge card/agreement) - revenue is discounted for NPV and any historical c
FASB 117
requires 3 basic financial statements - balance sheet, income statement, cash flow statement - required to show total revenues, expenses, gains, losses, amounts released from rest and 3 net asset classes
VHWO
Voluntary Health and Welfare Organizations [promotes general health and well-being of the public]
[operates from grants and gifts (e.g. Girl Scouts)]
VHWO must prepare a statement of:
statement of functional expenses [not required but recommended for other not-for-profits]
presents a matrix of expenses classified, on the one hand, by function (various programs, fund-raising etc.) and, on the other hand, by object or natural classificat
Accrual basis
required - calc and recording of depreciation, report expenses not expenditures or encumbrances
Funds
used by private not-for-profit organizations for bookkeeping purposes - but the financial statements are on an overall basis and do not make reference to funds except in the notes or supplemental schedules
Statement of Financial Position (BS)
A&L not required to be classified as current and non-current.
LT assets & debt reported.
Net Assets (equities) classified as:
[unrestricted - no donor imposed restrictions]
[temporarily restricted - time/purpose restrictions]
[permanently restricted - don
Treatment of unrestricted assets
Revenues = increases unless use limited by donor-imposed restrictions
Expenses = decreases in unrestricted net assets
Gains/Losses = increases / decreases respectively unless limited by donor-imposed restrictions
Expirations of restrictions on net assets
Statement of Activities (IS): support
class of revenues limited to gifts such as contributions
IS: exchange transaction
sales of service, labeled "revenues
IS: expenses
expenses reported in the unrestricted column - classified as program or supporting services
IS: restrictions
temporarily restricted resources must be "released" or moved from the temporary column to the unrestricted column as restrictions are satisfied
IS: revenues minus expenses
called "change in net assets
Statement of Cash Flows: operating
interest expense, interest revenue, G/L
classified as OPERATING
SOCF: investing
purchases or sales of fixed assets as well as purchases or sales of long-term investments
SOCF: financing
issuance of debt; repayments of principal of debt
Unconditional pledges: how to record
recorded before cash received
recorded at present value, net of allowance for estimated uncollectibles
change in present value (if extended time before gift is received) recorded as add'l contribution rather than interest
Contributed services recorded when:
if they enhance a nonfinancial asset (Dr. Asset, Cr. Contribution revenues)--[if nonfinancial asset is not enhanced must dr. expense) OR;
require specialized skills, were provided by someone possessing those skills, and would have been purchased if not do
Exchange-like transaction versus contributions
Exch: Money rec'd in advance - deferred revenue
Contrib: considered revenues as soon as rec'd
Difference between NFP statements and business statements
Change in net assets is not a measure of organizational effectiveness since many revenues are non-exchange
When do NFPs have a profit
- replace / expand equipment and facilities
- provide working capital
- retire debt
- continue/expand programs beyond the time frame when seed money grants are available
Program Expense Ratio
program service expenses / total expenses
Program services
include expenses associated with performing the mission of the organization
Supporting services
include management and general; fund raising and membership development
Program Expense Ratio: high ratio
assures donors that the organization spends the bulk of dollars donated for its mission oriented activities rather than for overhead
Criteria determining if a program expense:
Purpose: does the communication help meet program goals and functions?
Audience: general audience, not just sent to last year's donors
Content: calls for specific action directed at program goals
SFAS 124: accounting for certain investments
investments with readily determinable market values to be recorded at fair market values and gains/losses be recognized
Mergers of NFPs
transaction in which the governing bodies of two or more NFP entities relinquish control of those entities to create a new NFP entity - newly formed governing body - new legal entity
account for merger using carryover method
Carryover method
book values carryover to new entity--recognize assets and liabilities in amounts reported in financial statements of merging entities
no internally developed intangible assets are recognized
new reporting entity after merger
Acquisition of NFP
combination but not merger - accounting treatment similar to purchase method of accounting for business combinations
**record acquired assets and liabilities at their fair values at the date of acquisition
NCI reported at fair value at acquisition date an
Goodwill
NFP that derive revenues from business-like activities are required to measure/report goodwill as an asset in a similar manner as businesses
entities that derive their revenues from contributions are to expense goodwill at date of acquisition