Chapter 18 Imsm

CHAPTER 18 ACCOUNTING FOR NOT-FOR-PROFIT ORGANIZATIONS Chapter Outline I. Historically, the financial reporting for private not-for-profit entities have differed significantly according to the type of organization (such as a health care center versus a college or university). The reporting of these entities is now standardized considerably by FASB pronouncements that focus on the reporting of contributions and the financial statements to be issued. However, public colleges and universities and similar organizations still must follow the standards issued by the GASB. A. This chapter looks at the financial reporting for private not- for-profit organizations. The FASB has placed the emphasis on the entity as a whole rather than on the individual funds. B. Reporting for these organizations should be similar to a business entity unless a critical difference exists that impacts the needs of the financial statement users. Several critical differences can be identified such as: 1. Many private not-for-profit organizations receive a significant amount of their financial resources from contributions rather than from revenues or capital investments. 2. Some of the resources given to a not-for-profit organization include donor-imposed restrictions. 3. No single indicator of success is present such as net income provides for a for-profit business entity. II. The FASB has established the following financial statements for a private not-for-profit organization. A. Statement of Financial Position reports assets, liabilities, and net assets. B. Statement of Activities and Changes in Net Assets reports revenues, expenses, gains, and losses. C. Statement of Cash Flows D. A voluntary health and welfare organization is also required to present a Statement of Functional Expenses which indicates the allocations of resources to program services (to meet the goals McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2009 Hoyle, Schaefer, Doupnik, Advanced Accounting, 9/e 18-1

Chapter 18 Imsm

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