Other NFP - 1 OTHER NFP ENTITIES. Other NFP - 2 Not-for-Profit Organizations General Characteristics –Contributed resources from providers without a

Other NFP - 1

OTHER NFP ENTITIES

Other NFP - 2

Not-for-Profit Organizations

General Characteristics– Contributed resources from providers without a return of

equal financial value– Operating purpose that is other than providing goods

and services for profit– They do not have ownership interests as do for- profits

They may be governmental or private Great variety

– Charitable– Educational– Civic organizations– Political parties– Trade organizations– Fraternal associations

(In 2007, approximately 2.8 million not-for-profits existed just in the United States)

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Other NFP - 3

Contributions to Various Not-for-Profits in 2004

Religious $ 88.30 BillionEducation 33.84 BillionFoundations 24.00 BillionHealth 20.89 BillionArts and culture 13.99 Billion

Environmental 7.61 billion

Source: AAFRC Trust for Philanthropy website, http://www.aafrc.org (2005)

““That’s a lottaThat’s a lottaDough!!Dough!!

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http://www.aafrc.org/

Other NFP - 4

Large Nonprofits

2005 Revenues

YMCA of the USA $5,130,851,000Salvation Army $4,559,292,000American Red Cross $3,888,172,726Catholic Charities USA $3,286,072,070Goodwill Industries $3,022,623,000

(Source: The Nonprofit Times, November 1, 2006)

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Other NFP - 5

Authoritative Jurisdiction

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Other NFP - 6

Two basic ideas form the FASB’s framework for not-for-profit standards:

Two basic ideas form the FASB’s framework for not-for-profit standards:

Financial Reporting

The financial The financial statements should statements should focus on the entity focus on the entity

as a whole.as a whole.

The financial The financial statements should statements should focus on the entity focus on the entity

as a whole.as a whole.

Reporting Reporting requirements for not-requirements for not-for-profits should be for-profits should be similar to business similar to business

entities, unless there entities, unless there are critical are critical

differences in the differences in the needs of users.needs of users.

Reporting Reporting requirements for not-requirements for not-for-profits should be for-profits should be similar to business similar to business

entities, unless there entities, unless there are critical are critical

differences in the differences in the needs of users.needs of users.

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Other NFP - 7

PRIVATE, NFP ENTITIES

Reporting subject to FASB

Classification of “Net Assets”– Unrestricted– Temporarily restricted– Permanently restricted

SFAS Nos. 93, 116, 117, 124, 136

Other NFP - 8

A Little History….

Prior to 1993, there was a confusing variety of private not-for-profit accounting practices

In that year, FASB tried to standardize this reporting by issuing– SFAS 116, “Accounting for Contributions

Received and Contributions Made” – SFAS 117, “Financial Statements of Not-

for-Profit Organizations”

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Other NFP - 9

FASB No. 117 requires three

financial statements.

FASB No. 117 requires three

financial statements.

Financial Reporting

Statement of Financial Position– Uses “Net Assets” instead of

owners’ equity or fund balance. Statement of Activities and Changes in

Net Assets Statement of Cash Flows Statement of Functional Expense

(required only for voluntary health and welfare organizations).

Statement of Financial Position– Uses “Net Assets” instead of

owners’ equity or fund balance. Statement of Activities and Changes in

Net Assets Statement of Cash Flows Statement of Functional Expense

(required only for voluntary health and welfare organizations).

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Other NFP - 10

?? ??

Report assets, liabilities, and

net assets.

Report assets, liabilities, and

net assets.

Net assets are presented in 3 categories:Unrestricted

Temporarily RestrictedPermanently Restricted

Net assets are presented in 3 categories:Unrestricted

Temporarily RestrictedPermanently Restricted

Use the term “Net assets” rather than

owners’ equity or fund balance.

Use the term “Net assets” rather than

owners’ equity or fund balance.

Statement of Financial Position

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Other NFP - 11

Statement of Financial Position

Restrictions must be imposed by outside donors before an asset is classified as “restricted”– For financial statement purposes, board-designated

or internally restricted assets continue to be classified as “unrestricted”

Temporarily restricted– For a particular purpose OR– For use in a future time period

Permanently restricted– Expected to remain restricted for as long as the

organization exists

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Other NFP - 12

Per FASB No. 116, donors’ unconditional promises to

give are recognized as both a revenue and a

receivable in the period of promise.

Per FASB No. 116, donors’ unconditional promises to

give are recognized as both a revenue and a

receivable in the period of promise.

Change in net assets is reported instead of net

income.

Change in net assets is reported instead of net

income.

Revenues & expenses are

measured on the accrual basis.

Revenues & expenses are

measured on the accrual basis.

Statement of Activities and Changes in Net Assets

Change in net assets = difference between

revenues and expenses

Change in net assets = difference between

revenues and expenses

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Other NFP - 13

General Specific purpose Time Restricted Plant replacement and

expansion Endowment

Hospital AccountingHospital Accounting

Fund Groups

Restricted

Uses accrual accounting

Other NFP - 14

Overview of Hospital Accounting/ReportingOverview of Hospital Accounting/Reporting

Specific Purpose FundsSpecific Purpose Funds

Contributions, transfers, and other changes are recorded directly in the fund. Resources are held until transferred to general fund for expenditures.

Resources restricted for specific operating purposes.

Accounting basis

Distinguishing features

Financial statements

Balance SheetStatement of OperationsStatement of Changes in Net AssetsStatement of Cash Flows

Other NFP - 15

Time Restricted FundsTime Restricted Funds


Resources not available until date specified by donor.


Accounting basis



Overview of Hospital Accounting/Reporting Overview of Hospital Accounting/Reporting

Other NFP - 16

Plant Replacement and Plant Replacement and Expansion FundsExpansion Funds


Resources restricted for addition to plant assets.



Accounting basis



Other NFP - 17

Endowment FundsEndowment Funds


Principal must be preserved.



Accounting basis



Other NFP - 18

amounts due from patients third-party payors other insurers of health

care pledges or grants interfund transactions

amounts due from patients third-party payors other insurers of health

care pledges or grants interfund transactions

Balance Sheet - HospitalsBalance Sheet - Hospitals

Receivables may include--

Receivables should be reported at the anticipated

realizable amount.

Receivables should be reported at the anticipated

realizable amount.

Other NFP - 19


Investments are initially recorded at cost if purchased, or at fair value at the date of receipt

if received as a gift.

Investments are initially recorded at cost if purchased, or at fair value at the date of receipt

if received as a gift.

Other NFP - 20


Property, plant, and equipment is reported,

together with any accumulated depreciation. Depreciation is recorded in

the general fund.

Property, plant, and equipment is reported,

together with any accumulated depreciation. Depreciation is recorded in

the general fund.

Separate disclosure should be made for assets that have

restrictions placed on their use by the donor or have been

designated by the board of directors for special use.

Separate disclosure should be made for assets that have

restrictions placed on their use by the donor or have been

designated by the board of directors for special use.

Other NFP - 21


Long-term debt is shown in the balance sheet. This differs from most governmental

entities in which a separate debt service fund is established to

service debt.

Long-term debt is shown in the balance sheet. This differs from most governmental

entities in which a separate debt service fund is established to

service debt.

The net asset are segregated between those which are unrestricted, temporarily

restricted, and permanently restricted.

The net asset are segregated between those which are unrestricted, temporarily

restricted, and permanently restricted.

Other NFP - 22

Net patient service revenue– Revenue from inpatient and outpatient care (excluding charity care

and contractual adjustments).

– Contractual adjustments• A deduction from revenue based on contracts with third-party payors in

the medical reimbursement process.

Income from ancillary programs

– Income from television rentals, cafeteria sales, sales in the gift shop, parking fees, and educational program’s tuition.

Interfund transfers– Release of restricted funds to unrestricted status when the

stipulations set by the donor have been met.

General fund expenses– Expenditures for nursing and other professional services,

depreciation, bad debts, and administrative costs.

Statement of Operations - HospitalsStatement of Operations - Hospitals

Other NFP - 23

create or enhance nonfinancial assets, or

require specialized skills, are provided by individuals possessing those skills, and

would typically need to be purchased if not provided by donation.

Donations - HospitalsDonations - Hospitals

FASB 116 requires donated services to be recognized if the services received --

Other NFP - 24

Donated assets are reported as contributions in the statement of operations, if unrestricted.

Restricted donated assets are reported as contributions to the temporarily restricted funds in the period received.

Donated assets are reported at fair market value at the date of contribution:

When the restriction no longer applies, the net

assets released are reported in the

unrestricted fund.

When the restriction no longer applies, the net

assets released are reported in the

unrestricted fund.

Donations

Other NFP - 25

Public Colleges and Universities

Public colleges and Public colleges and universities must follow universities must follow the same guidelines as the same guidelines as

state and local state and local governments. (GASB governments. (GASB

retains primary retains primary reporting authority)reporting authority)

Their statements will Their statements will differ from those of differ from those of

private colleges and private colleges and universities.universities.

Public colleges and Public colleges and universities must follow universities must follow the same guidelines as the same guidelines as

state and local state and local governments. (GASB governments. (GASB

retains primary retains primary reporting authority)reporting authority)

Their statements will Their statements will differ from those of differ from those of

private colleges and private colleges and universities.universities.

17-25

Other NFP - 26Colleges and Universities--Special ConventionsColleges and Universities--Special Conventions

•For university-sponsored scholarships, revenue is credited at full standard rate for tuition.

•Scholarships recorded as contra revenue (no service required) or expenditure (service required)

•For university-sponsored scholarships, revenue is credited at full standard rate for tuition.

•Scholarships recorded as contra revenue (no service required) or expenditure (service required)

Revenue and Expenditure RecognitionRevenue and Expenditure Recognition

Tuition and fees are primary revenue sources

for the unrestricted current fund.

Tuition and fees are primary revenue sources

for the unrestricted current fund.

Other NFP - 27


If a student withdraws and receives a partial reimbursement

of tuition and fees, record as contra revenue

If a student withdraws and receives a partial reimbursement

of tuition and fees, record as contra revenue

Colleges and Universities--Special ConventionsColleges and Universities--Special Conventions

Other NFP - 28

When an academic term begins in one academic term and ends in

another, revenue is recognized in the fiscal year in which the term is

predominantly conducted.

When an academic term begins in one academic term and ends in

another, revenue is recognized in the fiscal year in which the term is

predominantly conducted.



Other NFP - 29

Mandatory transfers = transfers resulting from binding legal agreements on financing or renewals and

replacements of education plants, and from grant agreements with agencies of the federal government,

donors, and others.

Mandatory transfers = transfers resulting from binding legal agreements on financing or renewals and

replacements of education plants, and from grant agreements with agencies of the federal government,

donors, and others.

Nonmandatory transfers = discretionary transfers specified by the governing board for a variety of purposes. Nonmandatory transfers may also be made from the loan,

endowment, or annuity funds to the current funds.

Nonmandatory transfers = discretionary transfers specified by the governing board for a variety of purposes. Nonmandatory transfers may also be made from the loan,

endowment, or annuity funds to the current funds.


Designated funds = internal designation similar to appropriations of retained earnings. These funds

remain unrestricted.

Designated funds = internal designation similar to appropriations of retained earnings. These funds

remain unrestricted.

Other NFP - 30

Public Colleges and UniversitiesPublic Colleges and Universities

The GASB has specified that public colleges and universities must

follow the accounting and financial reporting standards as used for other

governmental entities.

The GASB has specified that public colleges and universities must

follow the accounting and financial reporting standards as used for other

governmental entities.

Other NFP - 31

The three financial statements required by the FASB for private, not-for-profit colleges and universities are:

The three financial statements required by the FASB for private, not-for-profit colleges and universities are:

(1) Statement of financial position

(2) Statement of activities

(3) Statement of cash flows

Private Colleges and UniversitiesPrivate Colleges and Universities

Other NFP - 32

Statement of financial position Statement of activities Statement of cash flows Statement of functional

expenses


expenses

Voluntary Health and Welfare OrganizationsVoluntary Health and Welfare Organizations

Financial statements for a VHWO:

Other NFP - 33

Cemeteries Civic organizations Fraternal

organizations Labor unions Libraries Museums Other cultural

institutions Performing arts

organizations Political parties





Other Not-for-Profit EntitiesOther Not-for-Profit Entities

Other NFP - 34










Private and community foundations

Private elementary and secondary schools

Professional associations

Public broadcasting stations

Religious organizations

Social and country clubs

Trade associations

Private and community foundations

Private elementary and secondary schools

Professional associations

Public broadcasting stations

Religious organizations

Social and country clubs

Trade associations

Other NFP - 35



expenses – Not required but often appropriate


expenses – Not required but often appropriate

Financial statements for a ONPO:

Documents

Other NFP - 1 OTHER NFP ENTITIES. Other NFP - 2 Not-for-Profit Organizations General Characteristics –Contributed resources from providers without a