1. U NIQUE A SPECTS OF N ONPROFIT A CCOUNTING March 2, 2010

2. Q UESTIONS : What are the differences in financial statements between for-profits and nonprofits? How are assets classified and accounted for? What is fund accounting? What guidelines govern nonprofit accounting and financial reporting?

3. R EVIEW OF F INANCIAL S TATEMENTS Statement of Financial Position Statement of Activities Statement of Cash Flow Statement of Functional Expenses

4. S TATEMENT OF F INANCIAL P OSITION Nonprofits do not have to segregate assets and liabilities in current and long term, instead Show assets in order of declining liquidity; or Disclose liquidity in the notes to financial statements Assets must also be segregated by donor- imposed restrictions o Net assets must be divided into categories of restrictions

5. S TATEMENT OF A CTIVITIES Revenues and support are shown as increases in unrestricted net assets unless there are donor- imposed restrictions Expenses are decreases in unrestricted net assets. Expenses are reported separately from revenues. It is not generally permissible to show net income/loss in line item Investment gains and losses are reported as changes in unrestricted net assets

6. F UND A CCOUNTING Organization is separated into distinct entities called and labeled fund. This distinction is not usually used for reporting except in statement of functional expenses.

7. D ONATED G OODS AND S ERVICES Contributions, gifts, and donations are recorded at fair market value Donor receipts follow the same guidelines Personal services are recorded as both revenue and expense if they create or improve nonfinancial assets, or would typically be purchased if not donated

8. A CCOUNTING FOR F UNDRAISING Material from reading- publicizing and conducting fund-raising campaigns maintaining donor mailing lists conducting special fund-raising events preparing and distributing fund-raising manuals, instructions, and other materials conducting other activities involved with soliciting contributions from individuals, foundations, government agencies, and others

9. F EDERAL I NCOME T AXES Generally exempt from income taxes Must pay tax on unrelated business income and on income from profits for goods or services that compete with for-profit organizations. (i.e. outpatient pharmacy profits)

10. A CCOUNTING FOR C ONTRIBUTIONS FASB 116: contributions not exchange transactions (grants, fees for service, etc.) Requires that all unconditional promises be recognized in the year the notification of the pledge is received and may cause significant variations in net assets from year to year Donor imposed restrictions: Permanent - all contributions not expendable Temporary – by purpose or time

11. I NTERFUND T RANSACTIONS Reflect the separation of fund accounting Refer to loans between programs (i.e. operations borrows from indirect) Also may refer to the exchange of goods or services Interfund sales use accounts payable and receivable as opposed to “due to/from” (i.e. Hospital contracts with its nursing program for continuing education for staff.)

12. M IDTERM R EVIEW Next Week!

13. B ASICS OF N ONPROFITS What makes nonprofits different from for- profit businesses? What are financial issues currently facing nonprofits? How should these be addressed? How much of US Economy is comprised of nonprofits? What is the largest nonprofit employment sector? Who gives the least and the most?

14. B UDGETING BASICS What is a budget? What is the financial management process? What are the elements of planning and where does budgeting fit in? What are the components of a budget? How is a budget developed? What are the types of budgets? What kinds of accounting do nonprofits use? What are the different budgeting formats?

15. A CCOUNTABILITY What role do ethics play in fiscal management and budgeting? What is the definition of accountability? What values tie mission to accountability? What are the elements of a management control system? How did SOX affect nonprofits? What other factors affect organizational accountability?

16. F INANCIAL R EPORTING Who uses nonprofit financial statements? What are the types of financial statements and formulas for each? What elements are in each type of financial statement? What accounting periods are used in nonprofits? What do the notes to financial statements contain?

17. Q UESTIONS ? Study and rest. See ya next week!