Accounting for Not-for-Profit Organizations, written by Dominic L. Daher, MAcc, JD, LLM in Taxation at the University of San Francisco and Stacy E. Daher, MAcc, CPA, University of San Francisco, analyzes the accounting and reporting requirements for most nongovernmental not-for-profit organizations. More specifically, this Portfolio comprehensively surveys generally accepted accounting principles (GAAP) as they relate and apply to not-for-profit organizations.
Accounting and disclosure requirements for not-for-profit organizations differ significantly from those of for-profit organizations. Not-for-profit organizations do not utilize equity ownership interests, receive a significant portion of their revenues from donors, and have different motives for existence than their for-profit counterparts.
This Portfolio describes the accounting rules and reporting requirements that have been established specifically for not-for-profit organizations in Financial Accounting Standards Board (FASB) Statement No. 116, Accounting for Contributions Received and Contributions Made, and FASB Statement No. 117, Financial Statements of Not-for-Profit Organizations. Those pronouncements require net assets of not-for-profit organizations to be classified as unrestricted, temporarily restricted, or permanently restricted, in accordance with the donor's intent.
This Portfolio discusses in depth a number of accounting and disclosure issues unique to not-for-profit organizations including revenues and receivables from contributions, agency transactions, and split-interest agreements. In addition, this Portfolio discusses the accounting and disclosure issues related to collections of art, historical treasures, and other similar assets.
Finally, Accounting for Not-for-Profit Organizations describes the basic financial statements for not-for-profit organizations, including: the statement of financial position, statement of activities, and statement of cash flows.
The disclosure requirements for each of these statements and other footnote disclosures are also discussed herein.
Accounting for Not-for-Profit Organizations allows you to benefit from:
This Portfolio is included in the Accounting Policy & Practice Series, a comprehensive series of titles which explain, explicate, and offer commentary on a wide range of accounting and financial management topics, including revenue recognition, income taxes, leasing, business combinations, debt instruments, risk management, internal controls and more.
Detailed Analysis
I. Introduction
Introductory Material
A. Scope of Portfolio
B. Authoritative Accounting Literature
II. Basic Financial Statements
A. Introduction
B. Statement of Financial Position
1. Introduction
2. Form and Content
a. Reporting Classifications
b. Information About Liquidity
c. Net Asset Classes
3. Financial Statement Presentation
C. Statement of Activities
b. Functional Reporting of Expenses
D. Statement of Cash Flows
a. Operating Activities
b. Investing Activities
c. Financing Activities
d. Direct Versus Indirect Method of Reporting Cash Flows From Operating Activities
(1) Direct Method
(2) Indirect Method
e. Disclosure of Non-Cash Investing and Financing Activities
E. Comparative Financial Information
III. Cash and Cash Equivalents
B. Definitions
C. Financial Statement Presentation and Disclosure
1. Statement of Financial Position
2. Footnote Disclosure
IV. Investments in Debt Securities and Equities With Readily Determinable Fair Values
B. Donor-Restricted Endowment Funds
C. Investment Pools
D. Investments in Marketable Securities
2. Definitions
a. Debt Securities
b. Equity Securities
3. Valuation
a. Valuation at Acquisition
b. Valuation Subsequent to Acquisition
4. Investment Income
5. Unrealized and Realized Gains and Losses
a. Unrealized Gains and Losses
b. Realized Gains and Losses
E. Footnote Disclosures
V. Revenues and Receivables from Exchange Transactions
B. Definition of Exchange Transactions
C. Recognition and Measurement
1. Distinguishing Between Exchange Transactions and Contributions
2. Memberships and Dues
3. Grants, Awards, and Sponsorships
4. Distinguishing Between Revenues and Gains
D. Allowance for Uncollectible Accounts
E. Financial Statement Presentation and Disclosure
F. Loans and Notes Receivable
VI. Revenues and Receivables From Contributions
B. Definition
C. Recognition and Measurement Principles
1. Measurement Principles
2. Agency Transactions
a. Transfers of Assets That Are Contributions
b. Transfers of Assets That Are Revocable, Repayable, or Reciprocal
c. Required Disclosures for Reciprocal Transactions
3. Donor-Imposed Conditions and Restrictions
a. Donor-Imposed Conditions
b. Donor-Imposed Restrictions
(1) Permanently Restricted Contributions
(2) Temporarily Restricted Contributions
(3) Unrestricted Contributions
c. Footnote Disclosure
4. Unconditional and Conditional Promises to Give
a. Unconditional Promises to Give
(1) Recognition
(2) Initial Measurement
(3) Subsequent Measurement
b. Intentions to Give
c. Conditional Promises to Give
d. Disclosures
(1) Statement of Financial Position
(2) Footnote Disclosure
5. Gifts in Kind
a. Recognition and Measurement
b. Gifts in Kind Associated With Fundraising Events
c. Disclosure
6. Contributed Services
b. Disclosures
7. Contributed Utilities
8. Contributed Use of Long-Lived Assets
b. Disclosure
9. Contributed Collection Items
D. Other Financial Statement Presentation and Disclosures
1. Statement of Activities
VII. Split-Interest Agreements
B. Types of Split-Interest Agreements
1. Revocable Versus Irrevocable Split-Interest Agreements
a. Revocable Split-Interest Agreements
b. Irrevocable Split-Interest Agreements
2. Charitable Lead Trusts
a. Definition
b. Recognition and Measurement
(1) Not-for-Profit Organization Is Trustee
(2) Not-for-Profit Organization Is Not Trustee
3. Perpetual Trusts Held by Third Parties
4. Charitable Remainder Trusts
5. Charitable Gift Annuities
6. Pooled (Life) Income Funds
C. Disclosure of Split-Interest Agreements
1. Financial Statement Disclosure
a. Statement of Financial Position
b. Statement of Activities
VIII. Other Assets
B. Inventory and Supplies
1. Definition
2. Recognition and Measurement of Contributed Inventory
C. Prepaid Expenses, Deferred Charges, and Intangible Assets
2. Recognition and Measurement
D. Collections
3. Financial Statement Disclosure
a. Collection Items That Are Not Capitalized
b. Collection Items That Are Capitalized Prospectively
c. Collection Items That Are Capitalized Retroactively
d. Organizations That Capitalized Collections Prior to FASB Statement No. 116
IX. Property and Equipment
1. Contributions of Property and Equipment
2. Capitalized Interest
a. Recognition
b. Measurement
D. Depreciation Expense
1. Recognition and Measurement
2. Disclosure
E. Impairment or Disposal of Long-Lived Assets
1. Impairment of Long-Lived Assets to Be Held and Used
b. Reporting and Disclosure
2. Disposal of Long-Lived Assets
a. Long-Lived Assets to Be Disposed of Other Than by Sale
b. Long-Lived Assets to Be Disposed of by Sale
(2) Measurement
(3) Disclosure
F. Asset Retirement Obligations
2. Measurement
3. Disclosure
G. Other Financial Statement Presentation and Disclosure Requirements
X. Accounts Payable, Accruals and Other Liabilities
B. Accounts Payable and Accruals
C. Deferred Revenue
D. Refunds Due, Advances and Deposits
E. Unconditional Promises to Give
2. Financial Statement Disclosures
F. Guarantees of the Indebtedness of Others
G. Accounting for Contingencies
H. Tax-Exempt Financing
XI. Net Assets
B. Net Asset Classifications
1. Unrestricted Net Assets
2. Temporarily Restricted Net Assets
3. Permanently Restricted Net Assets
C. Reclassifications and Releases From Restriction
D. Financial Statement Presentation and Disclosure
XII. Expenses, Gains and Losses
B. Expenses
2. Recognition
3. Reporting Requirements
4. Functional Reporting
a. Program Services
b. Supporting Activities
c. Allocation of Expenses Among More Than One Function
5. Joint Activities
a. Description
b. Accounting for Joint Activities
(1) Purpose Criterion
(2) Audience Criterion
(3) Content Criterion
c. Illustrative Examples
d. Disclosures of Joint Costs
(1) Disclosure Requirements
(2) Illustrative Disclosure
C. Gains and Losses
1. Definitions
2. Reporting Requirements
Working Papers
TABLE OF WORKSHEETS
Worksheet 1 Illustrative Statement of Financial Position
Worksheet 2 Illustrative Statement of Activities
Worksheet 3 Illustrative Statement of Cash Flows
Worksheet 4 Transactions Reported in the Illustrative Financial Statements
Worksheet 5 List of Significant Accounting Pronouncements Principally Discussed
Bibliography
OFFICIAL
Financial Accounting Pronouncements:
Financial Accounting Standards Board (FASB)
FASB Statements of Financial Accounting Standards
FASB Interpretations
FASB Concept Statements
FASB Staff Positions
American Institute of Certified Public Accountants (AICPA)
Accounting Principles Board Opinions
AICPA Statements of Positions
AICPA Audit and Accounting Guides