Statement of Financial Position

• This is a quick review of the Statement of Financial Position (in for profit companies – this is called the Balance Sheet.

• This Statement lets you know what the association owns and what it owes.

• There is an example of a Statement of Financial Position, and questions that should be asked when looking at this Statement.

Non Profit Financial Statements

• Statement of Financial Position• Statement of Activities• Statement of Changes in Net Assets• Statement of Cash Flows• Notes and Supplemental Information

Three Major Sections

Assets (A) – What the nonprofit owns

Liabilities (L) – What the nonprofit owes

Net Assets (NA) – Variance between Assets and LiabilitiesAlso known as the Fund Balance

A = L + NA or A – L = NA

How to Read the StatementAssets

Assets 12/31/2011 12/31/2012

Cash 1,600,076 693,905

A/R 46,593 54,300

Accrued I/R 14,648 11,200

Investments 4,511,660 4,632,220

Prepaid Exp 193,050 3,000

Current Assets

6,366,027 5,394,625

Furniture & Equipment

123,307 105,055

Restricted Funds

47,200 47,200

Total Assets 6,536,534 5,546,880

• Assets are normally listed first• Look at the Dates - this is comparing Year End to

Year End. Sometimes you will see Month End to Month End.

• Questions that should be asked– Cash – Why did it decrease?

• Did Prepaid Expense increase?• Did Accounts Payable decrease?• Did Deferred Income decrease?• Did the association have more

disbursements than revenue?

– Accounts Receivable – Why is it increasing?• Is it taking longer for invoices to be paid?• Are there more outstanding invoices or are

there fewer invoices with larger balances?

– If Investments increased, why did the Accrued Interest Receivable decrease?

– Why did Prepaid Expense decrease?• What was paid last year that was not paid

this year?

How to Read the StatementLiabilities and Net Assets

Liabilities 12/31/2011 12/31/2012

Accounts Payable 323,730 135,780

Accrued Expense 270,000 265,000

Deferred Income 766,300 215,000

Total Liabilities 1,360,030 615,780

Net Assets

Unrestricted 5,055,504 4,803,775

Temporarily Restricted

73,800 80,125

Permanently Restricted

47,200 47,200

Total Net Assets 5,176,504 4,931,100

Total Liabilities and Net Assets

6,536,534 5,546,880

• Liabilities and Net Assets are normally listed together

• Questions that should be asked:– Accounts Payable - Why did it decrease?

• Are venders being paid earlier then before?

– Deferred Income - Why did it decrease?• Did invoices go out on time?

• The decrease in Net Assets will be the disbursements over revenue from your Statement of Activities

• Net Assets and Fund Balance are interchangeable terms.

• The restriction on Net Assets (Temporarily or Permanently) is a donor restriction not a Board restriction. If there is a Board restriction on Net Assets, that money would be included in Unrestricted and there would be a note in the appropriate section.

• Total Assets should equal Total Liabilities and Net Assets