Not-for-Profit Accounting & Reporting 1 - Entity Types/Financial Reporting/Special Issues Flashcards
What are the 4 types of Not-for-Profit entities?
1) Voluntary health and welfare organizations (VHWO)
2) Other not-for-profit organizations (NPO)
3) Healthcare
4) Colleges & Universities
What is the most highly tested area of Not-for-profits on the CPA exam?
Revenue recognition and types of net assets
What is a Voluntary health and welfare organizations (VHWO)?
A broad based organization that provides free or low-cost services w/ financial support derived from voluntary contributions and grants
Resource providers are not primary recipients of services
What are other NPOs?
Essentially NPO that benefit their members
Resource providers can be primary recipients of services
What is the standard setting body from NPOs?
The FASB, for all non-governmental hospitals, colleges & universities
Governmental hospitals, colleges & universities follow GASB standards
What is the purpose to NPO Financial Reporting?
1) Stewardship & Performance: how managers fulfill their stewardship responsibilities & other aspects of their performance
2) Services & Sustainability: services provided & the ability of organization to continue to provide those services
What are the 3 types of Net Asset categories based on type of restrictions for NPOs?
1) Unrestriced
2) Temporarily Restricted
3) Permanently Restricted
What type of reporting is used internally for NPOs vs Externally?
Internally = funds based Externally = entities based
What financial statements are required of VHWOs and other NPOs
1) Statement of Financial Position (ie B/S) required for both
2) Statement of Activities (ie I/S) required for both
3) Statement of Cash Flows: required for both
4) Statement of Functional Expenses: required for VHWO, optional for ONPO
What is the main difference on the Balance Sheet for an NPO vs a for profit entity?
The equity section, ie Net Assets are broken into 3 parts
Unrestricted
Temporarily Restricted
Permanently Restricted
How are revenues and expenses generally reported in the Statement of Activities for an NPO?
Revenues & gains are reported by source in each net asset category (ie. unrestricted, temp restricted, perm restricted).
Expenses are ONLY reported in Unrestricted Net Assets
& are reported by function
& classified as either:
- Program services
or - Supporting Services
Changes in classes of net assets are reported separately!
More specifically, how are revenues reported on the Statement of Activities?
Reported at gross
Revenues are the result of ongoing major or central activities
Revenues reported in appropriate net asset category
1) Unrestricted
2) Temporarily Restricted
3) Permanently Restricted
More specifically, how are expenses reported on the Statement of Activities?
ONLY reported in the Unrestricted Net Asset category
2 sub categories
- Program Services: expenses related to the primary mission of the organization
- Supporting Services: Expenses do not directly relate to the primary mission (eg. management, general, administration, fundraising)
How are gains or losses reported on the Statement of Activities?
May be reported at net or gross
Result from transactions that are considered peripheral or incidental to organizations, ie not related to main mission of NPO
Reported in appropriate net asset category
What does the Statement of Functional Expenses provide? and for whom is it required
Required for VHWO, optional for ONPOs
Provides detail to expenses section of the Statement of Activities for each program and support service by functional classification and by object class
