1. Nonprofit Management Certificate Course
Financial analysis and reporting

2. Overall Objectives Differences between commercial and nonprofit
Accounting and reporting concepts for nonprofits
Unique accounting matters
Basic reporting requirements
Basic tax considerations

3. Fiduciary Responsibility
Recipients of service
Contributors
Revenue sources (i.e. Grantors)

4. Fiduciary Responsibility
Efficiency
Effectiveness

5. Benefits to Nonprofits
Federal income tax exemption
Other tax benefits
Ability to attract contributions
Employment and excise tax benefits
Preferred postal rates
Special annuity provisions

6. Business Vs. Nonprofit Profit motive Cost or traditional accounting
Sales of goods and services
Financial statement users
Managerial responsibility
Fund accounting
Donated assets
Financial statement users

7. Types of Nonprofits Voluntary health and welfare Nongovernmental
Colleges and universities

8. Financial Statement Users
Funding sources
Regulatory agencies
Beneficiaries
Trustees/ directors
Governmental units
Creditors
Constituent organizations
Employees

9. Service Efforts and Accomplishments
What is the organization’s purpose?
Who does the organization serve?
What services are offered?
How are the services provided?
How well are the services delivered?

10. Financial Statement Purpose
Report nature and amount of available resources
Identify principal programs and costs
Disclose degree of control by donors over resource use

11. Accrual Basis Reporting
Goods/services purchased are recorded when title passes or services are received
Revenues reported when earned
Support recognized upon legal enforceable right to assets

12. Basic Financial Statements
Statement of financial position
Statement of activities
Statement of cash flows
Notes to financial statements
Statement of functional expenses(vhw)

13. Philosophy of Reporting
Where business enterprises and not-for-profits are alike, the financial statements should be similar because certain information is useful to resource providers regardless of the type of entity. However, when transactions and objectives are different, financial reporting should be different.

14. Key Differences
Contributions, where resources are received without return of value in exchange
Donor-imposed restrictions
Multiple performance indicators necessary

15. Basic Resources Unrestricted net assets Designated net assets
Temporarily restricted net assets
Permanently restricted net assets

16. Combined Financial Statements
Look for elements of control:
Solicitation
Resource use
Assigned functions

17. Contributions - FASB No. 116
Transfers that are
Nonreciprocal
Made or received voluntarily
To or from entities acting other than as owners
Unconditional

18. Rules for Recognizing Contributions
Revenue recognition upon the occurrence of the underlying event
Donor-imposed restrictions do not change timing of recognition

19. Rules for Recognizing Contributions
Donor-imposed conditions affect the timing of the recognition
Contributions are measured at fair value of the assets received

20. Footnotes to Statements
Basis of accounting
Key definitions
Use of estimates
Additional analysis of financial statement numbers

21. Statement of Financial Position
Total assets
Total liabilities
Total net assets
Unrestricted net assets
Temporarily restricted net assets
Permanently restricted net assets

22. Donor Imposed Restrictions
Support of particular programs
Investment for a specified term
Use in a specified future period
Acquisition of long-lived assets

23. Format of Statement
Flexibility
Liquidity

24. Statement of Activities - Purpose
Effects of transactions changing net assets
Relationship of those changes to each other
How resources are used in providing various programs and services

25. Statement of Activities - Purpose
Evaluate performance
Assess service efforts and ability to provide service
Assess how managers have discharged their stewardship

26. Statement of Activities
Change in net assets
Change in permanently restricted net assets
Change in temporarily restricted net assets
Change in unrestricted net assets

27. Statement of Activities
Revenues - inflows of resources that result from an organization’s ongoing major and central activities
Gains
Contributed services

28. Contributed Services Must create or enhance nonfinancial assets
Require specialized skills, are provided by individuals possessing those skills and would typically need to be purchased if not donated

29. Expenses Always reported as decreases in unrestricted net assets
Functional classification
Programs
Fund raising
Management and general
Natural classification
Salaries, utilities, etc.

30. Program Services
Activities that result in goods and services being distributed to beneficiaries, customers or members that fulfill the purposes or mission for which the organization exists.

31. Management and General
Business management
General recordkeeping
Budgeting
Financing and related administrative activities

32. Fund Raising Publicizing and conducting fund-raising campaigns
Maintaining donor mailing lists
Conducting special fund-raising events

33. Functional Reporting

34. Cost Allocation Indirect Direct Allocation Cost study By transaction
Time study
Space utilization

35. Reporting Options Investment revenues and expenses
Contributions whose restrictions are met in same period
Contributions of long-lived assets

36. Cash Flow Statement-purpose
Ability to generate positive future cash flows
Ability to meet obligations
Reasons for differences between changes in net assets
Effects of cash and noncash investing and financing activities