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HOW TO USE PPC'S NONPROFIT FINANCIAL STATEMENT ILLUSTRATIONS AND TRENDS

PPC's Nonprofit Financial Statement Illustrations and Trends should be used as an �Accounting Trends andTechniques" for nonprofit organizations. It is organized into three primary parts: the Trends survey, the MasterFinding List, and the Illustrative Financial Statements.

The Trends survey provides interesting insights into the financial statement presentation policies of nonprofitorganizations. It includes results of a nonstatistical sample of the financial statements of 50 nonprofit organizations.As noted below, 76 financial statements were submitted in 2011; however some firms submitted several state�ments. The objective of the Trends survey is to describe reporting alternatives that are available to organizations ina GAAP presentation1 and to track which alternatives organizations chose from among those alternatives.

The Master Finding List provides the organizational characteristics of the 22 entities whose financial statements areincluded in this publication. The list helps the reader locate appropriate examples. The Master Finding Listdescribes:

� The industry classification of the organization (religious, school, performing arts,foundation, etc.).

� The tax exempt status of the organization [501(c)3, 501(c)7, etc.].

Each organization in the Master Finding List is given an illustration number. That number appears at the top of eachpage of the included illustrative financial statement. The numbers help the reader locate the desired organizationwithin the Illustrative Financial Statements. In addition, by combining all pages with the same number, a reader canaccumulate a complete financial report for the organization.

The Illustrative Financial Statements section is further divided into five sections:

� Statement of financial position

� Statement of activities

� Statement of cash flows

� Statement of functional expenses

� Notes to financial statements

An index at the beginning of each section helps to locate examples of specific formats and disclosures. Forexample, the index to the statement of financial position section includes topics such as contributions receivable,deferred revenue, split�interest agreements, and investments.

The financial statements illustrated in this Trends were selected from 76 financial statements submitted in 2011 by30 accounting firms from 19 states and 6 nonprofit organizations from 6 states. The identities of the organizationsand their accountants have been changed to provide the confidentiality promised to those submitting financialstatements. In some cases, disclosures have been omitted due to space limitations. In other cases, informationwas omitted because some aspect of the financial statements may not have been in compliance with generallyaccepted accounting principles and the uncertainty could not be easily resolved. Although the authors havecarefully edited the statements and notes, some errors may remain because the facts and circumstances underly�

1 Similar alternatives are generally available when financial statements are prepared using an other comprehen�sive basis of accounting (OCBOA). If those statements reflect the same or similar items as statements preparedusing GAAP, disclosures similar to those required by GAAP for those items should be made. For more informa�tion about preparing OCBOA financial statements, see PPC's Guide to Cash, Tax, and Other Bases of

Accounting.

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ing specific transactions may not have been apparent. Accordingly, this Guide is not intended to be authoritative.Therefore, accountants should refer to PPC's Guide to Preparing Nonprofit Financial Statements, PPC's Guide to

Nonprofit GAAP, or other Thomson Reuters publications for discussions of applying generally accepted accountingprinciples to various transactions.

The reports included in this Guide are for fiscal years ending June 30, 2009 to September 30, 2010, with fiscal yearsending June 30, 2010, the most common. Thus, certain authoritative literature may not have been effective whenthe financial statements were drafted. Accordingly, the financial statements included in this Guide may not conformwith the requirements in the following Standards and should be used with care for situations or transactionsaddressed in:

� SFAS 161, Disclosures about Derivative Instruments and Hedging Activitiesan

amendment of FASB Statement No. 133 (Codified in FASB ASC 815), effective forfinancial statements issued for fiscal years and interim periods beginning afterNovember 15, 2008.

� SFAS 164, Not�for�Profit Entities: Mergers and AcquisitionsIncluding an amend�

ment of FASB Statement No. 142 (codified in FASB ASC 958), effective beginning onor after December 15, 2009.

� SFAS 168, The FASB Accounting Standards CodificationTM and the Hierarchy of

Generally Accepted Accounting Principlesa replacement of FASB Statement No.

162 (codified in FASB ASC 105), effective for financial statements issued for periodsending after September 15, 2009.

� FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan inter�

pretation of FASB Statement No. 109 (Codified in FASB ASC 740). For public enti�ties, this Interpretation is effective for fiscal years beginning after December 15,2006. For nonpublic entities, it is effective for fiscal years beginning after Decem�ber�15, 2008.

� FSP FAS 132(R)�1, �Employers' Disclosures about Postretirement Benefit PlanAssets," (Codified in FASB ASC 715) effective for fiscal years ending after Decem�ber 15, 2009.

� Accounting Standards Update (ASU) No. 2009�01, Generally Accepted Accounting

Principles, amendments based on Statement of Financial Accounting Standards No.

168The FASB Accounting Standards CodificationTM and the Hierarchy of Gener�

ally Accepted Accounting Principles, effective for financial statements issued forperiods ending after September 15, 2009.

� ASU No. 2009�05, Fair Value Measurements and Disclosures (Topic 820)Measur�

ing Liabilities at Fair Value, effective for the first reporting period, including interimperiods, beginning after issuance (August 2009).

� ASU No. 2009�06, Income Taxes (Topic 740)Implementation Guidance on

Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Non�

public Entities, effective for financial statements issued for periods ending afterSeptember 15, 2009.

� ASU No. 2009�12, Fair Value Measurements and Disclosures (Topic 820): Invest�

ments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent),

effective for periods ending after December 15, 2009.

� ASU No. 2010�06, Fair Value Measurements and Disclosures (Topic 820): Improving

Disclosures about Fair Value Measurements, generally effective for interim andannual reporting periods beginning after December 15, 2009.

� ASU No. 2010�07, Not�for�Profit Entities (Topic 958)Not�for�Profit Entities: Mergers

and Acquisitions, effective beginning on or after December 15, 2009.

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� ASU No. 2010�20, Receivables (Topic 310): Disclosures about the Credit of Financ�

ing Receivables and the Allowance for Credit Losses, effective for annual reportingperiods ending on or after December 15, 2011.

� ASU No. 2011�02, Receivables (Topic 310) A Creditor's Determination of Whether a

Restucturing Is a Troubled Debt Restructuring, effective for annual periods endingon or after December 15, 2012.

Your Comments, Suggestions, and Financial Statements

The authors encourage users of PPC's Nonprofit Financial Statement Illustrations and Trends to offer any commentsor suggestions that they may have to improve the usefulness of future editions. Of special interest are yourcomments about the usefulness of the trends survey and recommendations for additional statistics or types ofnonprofit organizations to be included in PPC's Nonprofit Financial Statement Illustrations and Trends. In addition,the authors encourage users to submit their organizations' financial statements for consideration for future editionsof PPC's Nonprofit Financial Statement Illustrations and Trends. The authors are particularly interested in receivingstatements that include unique or difficult reporting situations or that illustrate financial statement formats thatutilize flexibility in their design as permitted under FASB ASC 958 (formerly SFAS No. 117, Financial Statements of

Not�for�Profit Organizations).

Please address your comments, suggestions, or financial statements to:

Tax & Accounting Business of Thomson ReutersAttn.: A&A Research Assistant, NPTP.O. Box 966Fort Worth, TX 76101