Not-for-Profit Accounting Made Easy E-Book

Warren Ruppel

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 357

Veröffentlichungsjahr: 2010

Beschreibung

A hands-on guide to the ins and outs of nonprofit accounting Not-for-Profit Accounting Made Easy, Second Edition equips you with the tools you need to run the financial and accounting operations within your nonprofit organization. Even if you do not have a professional understanding of accounting principles and financial reporting, this handy guide makes it all clear with complex accounting rules explained in terms nonaccountants can easily understand in order to help you better fulfill your managerial and fiduciary duties. Always practical and never overtechnical, this helpful guide conforms to FASB and AICPA standards and: * Discusses federal single audit and its impact on nonprofits * Offers examples of various types of split-interest agreements * Shows you how to read and understand a nonprofit financial statement * Explains financial accounting and reporting standards * Helps you become conversant in the rules and principles of accounting * Updates board members, executive directors, and other senior managers on the accounting basics they should know for day-to-day operations * Features tables, exhibits, and charts that illustrate the content in a simple and easy-to-understand manner Suitable for fundraising managers and executives--as well as anyone who needs to read and understand a nonprofit financial statement--this is the ultimate not-an-accountant's guide to nonprofit accounting.

Leseprobe

Table of Contents

Title Page

Copyright Page

Preface

About the Author

CHAPTER 1 - Understanding the Basics of Not-for-Profit Accounting

WHAT ARE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES?

WHY IS PREPARING GAAP FINANCIAL STATEMENTS IMPORTANT?

DEFINITIONS AND EXAMPLES OF ASSETS, LIABILITIES, REVENUES, AND EXPENSES USUALLY ...

WHAT IS MEANT BY THE ACCRUAL BASIS OF ACCOUNTING? HOW DOES THIS DIFFER FROM THE ...

WHAT HAPPENED TO FUND ACCOUNTING?

SUMMARY

CHAPTER 2 - Basic Financial Statements of a Not-for-Profit Organization

STATEMENT OF FINANCIAL POSITION

STATEMENT OF ACTIVITIES

STATEMENT OF CASH FLOWS

SUMMARY

CHAPTER 3 - Accounting for Contributions

WHEN SHOULD CONTRIBUTIONS BE RECORDED?

UNDERSTANDING THE IMPACT OF DONOR RESTRICTIONS ON THE REPORTING OF CONTRIBUTIONS

ACCOUNTING FOR CONTRIBUTED SERVICES

ACCOUNTING FOR OTHER NONCASH CONTRIBUTIONS

PASS-THROUGH CONTRIBUTIONS

SUMMARY

CHAPTER 4 - Accounting for Investments and Financial Instruments

ACCOUNTING FOR INVESTMENTS

ACCOUNTING AND FINANCIAL REPORTING FOR FINANCIAL INSTRUMENTS

SUMMARY

CHAPTER 5 - Accounting for Activities with Joint Costs and Indirect Cost Allocation

ACCOUNTING FOR THE COSTS OF ACTIVITIES THAT INCLUDE FUND-RAISING

ALLOCATION METHODS

INDIRECT COST ALLOCATION PLANS

SUMMARY

CHAPTER 6 - Affiliated Organizations

AFFILIATED ORGANIZATIONS

FOR-PROFIT SUBSIDIARIES

RELATED-PARTY DISCLOSURES

SUMMARY

CHAPTER 7 - Collections

WHAT IS A COLLECTION?

ACCOUNTING FOR COLLECTIONS

SUMMARY

CHAPTER 8 - Split-Interest Agreements

ACCOUNTING FUNDAMENTALS

REVOCABLE SPLIT-INTEREST AGREEMENTS

IRREVOCABLE SPLIT-INTEREST AGREEMENTS

EXAMPLES OF SPLIT-INTEREST AGREEMENTS

SUMMARY

CHAPTER 9 - Accounting for Pension and Other Postretirement Employee Benefit Plans

ACCOUNTING FOR PENSION PLANS

DETERMINING PENSION EXPENSE

DETERMINING PENSION LIABILITY

ACTUARIAL ASSUMPTIONS AND CALCULATIONS

REQUIRED DISCLOSURES

DEFERRED COMPENSATION PLANS

OTHER POSTRETIREMENT BENEFITS

DISCLOSURES

SUMMARY

CHAPTER 10 - Lease Accounting Fundamentals

LEASE ACCOUNTING

OPERATING VERSUS CAPITAL LEASES

OPERATING LEASES

OPERATING LEASES WITH SCHEDULED RENT INCREASES

FREE RENT PERIODS

CAPITAL LEASES

SUMMARY

CHAPTER 11 - Analyzing the Financial Health of Not-for-Profit Organizations

FINANCIAL STATEMENT ANALYSIS

INDEPENDENT AUDITOR’S REPORT

COMPARATIVE FINANCIAL STATEMENTS

FUNCTIONAL EXPENSE RATIOS AND OTHER ANALYSES

BUDGET CONSIDERATIONS IN FINANCIAL ANALYSIS

RELATION OF THE BUDGET TO THE FINANCIAL STATEMENTS

METHODS OF BUDGETARY CONTROL

SUMMARY

CHAPTER 12 - Current Developments in Not-for-Profit GAAP

RECENT FASB STATEMENTS

SUMMARY

Index

This book is printed on acid-free paper.

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved.

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ISBN: 978-0-471-78979-6

Preface

Not-for-Profit Accounting Made Easy is a plain-language, easy to understand explanation of the various accounting and financial reporting practices of not-for-profit organizations. It is designed for all those individuals who have contact with these organizations—management and staff, board members (particularly audit committee members), consultants, donors, creditors—who should understand not-for-profit accounting but often do not. It is written for the nonaccountant, but those accountants who are unfamiliar with the nuances of not-for-profit accounting (or those who have grown a little rusty in the latest accounting pronouncements) and do not need an in-depth technical volume will also find it useful.

There are over one million not-for-profit organizations in the United States. They exist in all sizes and for many purposes. They range from homeless shelters to country clubs, from child day care centers to colleges and universities, from local to international. One thing these organizations all have in common is that their finances are subject to a great deal of scrutiny.

Since the publication of the first edition of this book, the accounting “industry” has undergone dramatic changes. Well-publicized accounting failures and frauds in large public companies led to the passage of the Sarbanes-Oxley Act of 2002. Although not applicable directly to not-for-profit organizations (except for some specific provisions that apply to all organizations with respect to protecting the rights of “whistle-blowers”), it is the trickle-down effect of these changes that have indirectly affected not-for-profit organizations. These changes will be discussed where applicable in this newly revised edition of this book, but there is no doubt that overall, not-for-profit organizations face increased scrutiny of their accounting and financial practices.

Effective accounting and financial reporting is a key ingredient in withstanding this increased scrutiny and ensuring accountability. Having a basic understanding of not-for-profit accounting and financial reporting can be a real asset for the many people who have contact with not-for-profit organizations in many different ways. This book is particularly important for a not-for-profit organization’s management and governing board who need a basic level of understanding of accounting and financial reporting to fulfill their fiduciary responsibilities. This book may not make you love not-for-profit accounting, but it will teach you the basics and help you read and understand a set of not-for-profit financial statements.

My thanks to all those at John Wiley & Sons, Inc., who helped make this book a reality, particularly John DeRemigis who supported and nurtured the concept and Judy Howarth and Pam Reh for making sure that the book is a quality product. Thanks also to my family, my wife Marie and sons Christopher and Gregory, for their continued support.

Warren Ruppel Woodcliff Lake, New Jersey January 2007

About the Author

Warren Ruppel, CPA, has over 25 years of expertise in not-for-profit and governmental accounting. He is currently the Director of Government Services at Marks Paneth & Shron LLP where he is also a key member of the firm’s quality assurance team. He previously was the assistant comptroller for accounting of the City of New York, where he was responsible for all aspects of the City’s accounting and financial reporting. He began his career at KPMG after graduating from St. John’s University, New York. He later joined Deloitte & Touche to specialize in audits of not-for-profit organizations and governments. Mr. Ruppel has also served as the chief financial officer of an international not-for-profit organization and as a partner in a small CPA practice.

Mr. Ruppel has served as instructor for many training courses, including specialized governmental and not-for-profit programs and seminars. He has also been an adjunct lecturer of accounting at the Bernard M. Baruch College of the City University of New York. He is the author of five other books, OMB Circular A-133 Audits, Not-for-Profit Organization Audits, and Wiley’s Not-for-Profit Audit Committee Best Practices, GAAP for Governments, and Governmental Accounting Made Easy.

Mr. Ruppel is a member of the American Institute of Certified Public Accountants as well as the New York State Society of Certified Public Accountants, where he serves on the Governmental Accounting and Auditing Committee and as a member of the Not-for-Profit Organizations Committee. He has also served as chair of the Society’s Audit Committee. He is also a past president of the New York Chapter of the Institute of Management Accountants. Mr. Ruppel is a member of the Government Finance Officers Association and serves on its Special Review Committee.

CHAPTER 1

Understanding the Basics of Not-for-Profit Accounting

This chapter provides some very basic information about not-for-profit accounting to provide a basis for understanding the principles and standards that are discussed in greater detail throughout the remainder of this book. A lack of understanding or misunderstanding of these fundamentals will cause the reader to be lost when trying to understand more complex principles. Specifically, this chapter will

• Identify generally accepted accounting principles.

• Define and give examples of assets, liabilities, net assets, revenues, and expenses usually found in not-for-profit organizations’ financial statements.

• Explain what is meant by the accrual basis of accounting. How does this differ from the cash basis of accounting, and which is better?

• Describe what happened to fund accounting.

WHAT ARE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES?

Nonaccountants sometimes ask the question, “Well, if these accounting principles are only generally accepted, that must mean that there are other perfectly good accounting principles that have less than general acceptance that are fine to use.” Unfortunately for those desiring creativity and uniqueness in their accounting principles, this is not the case. Generally accepted accounting principles (GAAP) are the rules of road that need to be followed by not-for-profit organizations if they want to proclaim that their financial statements are prepared in accordance with GAAP.

WHY IS PREPARING GAAP FINANCIAL STATEMENTS IMPORTANT?

Sometimes not-for-profit organizations are required by law or regulation to prepare financial statements in accordance with GAAP. Most states require that not-for-profit organizations that are organized within a state (or raise funds within that state) file an annual report with the state charities bureau (or its equivalent) and, for all but the smallest not-for-profit organizations, the annual reports usually require that financial statements prepared in accordance with GAAP be included with the annual report.