Gov and Non Profit - Final

Financial Accounting Standards Board (FASB)

Providing guidance on generally accepted accounting principles for not-for-profit organizations

Objectives of FASB

1. Making resources allocation decisions

2. Assessing services and ability to provide services

3. Assessing management stewardship and performance

4. Assessing economic resources obligations, net resources, and changes in them

Governmental Accounting Standards Board (GASB)

Responsible for government organizations including governmental not-for-profit organizations

GAAP for not-for-profit- organizations includes

1. Accrual basis of accounting

2. A statement of financial position

3. A statement of activities

4. A statement of cash flows

5. Comparative statements are encouraged but not required

Statement of activities

An operating statement that presents all changes in net assets without donor restrictions, net assets with donor restriction, and total net assets for the reporting period

Statement of cash flows

The classification used on the statement of cash flows are the same as those used by investor owned entities: Operating, investing, and financing

Classifications of net assets

1. Net assets without donor restrictions

2. Net assets with donor restrictions

Activities classified in Operating Activities

1. Receipt of gifts without donor restrictions

2. Sale of donated financial asset with no restrictions

Activities classified in Financial Activities

Receipt of and earning on net assets restricted for long-term purpose

Activities classified in investing activities

Acquisition of a building or equipment using restricted net assets

Activities classified in noncash investing and financial activities

Noncash or in-kind contributions

Revenues

Increases in net assets arising from exchange transactions in which the other party to the transaction is presumed to receive direct tangible benefits commensurate with the resources provided

Gains

Increases in net assets that relate to peripheral or incidental transactions of the entity and often are beyond the control of management

Support

A category of revenues arising from contributions of resources or nonexchange transactions are includes only amounts for which the donor derives no tangible benefits from the recipient agency

Program services

Result from the provision of goods or services that help achieve the major purposes or mission: Research, information, advocacy and public awareness

Support services

assists the NFP in carrying out its mission: Fund-raising, management and general

Pledge

is a promise to give assets to an organization

Conditional promise

not recorded until the condition have been substantially met

Unconditional promise

depends only on the passage of time or demand by the promise for performance

Receipt from the event

FASB required that revenues from special event be reported at gross unless the event is peripheral or incidental to the NFP

Fund-raising expense

Expenses related to promoting and conducting special events are reported as fund-raising expenses

Criteria for the allocation of joint costs

1. The total cost of activities that includes a fund-raising appeal should be reported as fund-raising costs unless a bona fide program or management and general function has been conducted in conjunction with the appeal for funds

2. The joint costs of bona fide program or management and general function should be allocated between the bona fide function and fund-raising using an equitable allocation base

3. Criteria of purpose, audience, and content must be met in order to conclude that a bona fide program or management and general function has been conducted in conjunction with the appeal for funds

Public C&U

• Governmental higher learning institutions

• Larger proportion of revenues from state appropriations and research grants

• Includes community colleges, which receive a large proportion of revenue from local property tax assessments

Private C&U

• Nongovernmental higher learning institutions

• Larger proportion of revenues from tuition, private contributions, and research grants

• May be either not-for-profit or for-profit