In today’s competitive environment it is critical for not-for-profits to have accurate financial reporting. Consider real-world financial statements, cases and problems faced by CPAs with not-for-profit clients and by executives of not-for-profit organizations.
Objectives:
Prerequisite: Experience in the not-for-profit environment
VALUE AID! Not-for-Profit Organizations AICPA Audit and Accounting Guide and the AICPA’s Checklists and Illustrative Financial Statements for Not-for-Profit Organizations
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Case 2 - Rotary Luncheon - The Big Picture
Learning Objectives
To introduce basic financial statements for not-for-profit organizations.
Also, to review the major features of accounting and reporting for not-for-profit organizations.
(Before tackling this case, consider Chapter 3 of the Guide.)
Facts
The setting is a table during lunch at a local Rotary meeting.
You are the CPA, Jane. Seated at the table with you are Nate, an auto dealer; Ann, owner of a dress shop; and Jack, president of a local bank.
A conversation begins.
Nate: Jane, what are you up to now that the tax season is over?
Jane: Some of the heat is off. But now I'm catching up on my work with my not-for-profit clients. Some of the rules for accounting for not-for-profits are unique, and some auditing problems are different.
Ann: Are the books kept differently? What are the differences?
Jane: Payroll's the same. And they pay bills when due. And the books are not very different.
Jack: Well, what's it all about, Jane? We're not familiar with accounting for not-for-profits. What is it like?
Required
Without boring your neighbors at the table, but recognizing that they are fairly sophisticated about finance and business, present a brief answer, based on the information in Chapter 3 of the Guide. Emphasize a few major points.
Case 3 - Practice Concerns
Learning Objective
To alert you to five special concerns when a CPA works on not-for-profit clients' statements.
(Before tackling this case, consider the following paragraphs in the Guide: 3.20, 3.21, 14.04, 14.05, 3.05, 3.10, 3.15, 3.18, 3.12, 3.13, and 13.41 to 13.55.)
Required
Respond to the following concerns about accounting for not-for-profits.
1. In the financial statements, is it appropriate to present summary comparative figures for the prior year?
2. What exactly is meant by the term "restriction?"
3. Is the Statement of Cash Flows the same for not-for-profits as for businesses?
4. The Statement of Activities leads down to Change in Net Assets. Is it permissible to break out the changes resulting from operations?
5. What accounting treatment should be followed for joint costs that include the costs of a fundraising appeal?
Case 4 - Contents of Financial Statements
Learning Objective
To call your attention to certain financial reporting details required under FASB ASC 958 (FASs 116, 117, and 124), and review the financial statements of Avant Ministries in Appendix A.
Required
Consider the following paragraphs in Chapter 3 of the Guide and review Avant Ministries' statements. Answer the questions next to each paragraph.
Question 1. Paragraph 3.04
Which methods are used to provide information about the organization's liquidity?Question 2. Paragraph 3.05
Does the Statement of Financial Position display figures for total Net Assets, Unrestricted Net Assets, Temporarily Restricted Net Assets, and Permanently Restricted Net Assets?Question 3. Paragraph 3.07
Are board-designated net assets displayed in any net asset class?Question 4. Paragraph 3.08
Does the Statement of Activities provide the amounts of changes in each class of net assets plus the change in total net assets?Question 5. Paragraph 3.08
How are reclassifications displayed?Question 6. Paragraph 3.13
Is there any provision for an intermediate measure of operations?Question 7. Paragraph 3.14
How are expenses classified - by nature or function?Question 8. Paragraph 3.17
Which method is used to report cash flows from operations?Question 9. Paragraph 3.18
In the Statement of Cash Flows is there display of cash contributions for longterm use under Financing Activities?Question 10. Paragraph 3.20
Does Avant present any comparative information? If so, is the information presented in conformity with GAAP?
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