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Not-For-Profit News
August 2017
Not-For-Profit External Financial Reporting - Part 1

By Elise Zuleger
Accounting Associate
 
In this first article of a five part series, the discussion will involve the general concept of not-for-profit (AKA nonprofit) accounting and what
must be reported when providing information externally. The succeeding parts of the series will break down each financial statement that is required to be reported,  giving further insight into each.
 
When must a not-for-profit organization externally report their financials?
 
Many not-for-profit organizations must externally report their financial information as part of an audit or review requirement. If an organization is required to have either an audit or a review, then the financial statements must be prepared according to Generally Accepted Accounting Policies (GAAP).  The audit or review may be required by government entities, major funders, creditors, or members of the organization.  Audited or reviewed financial statements help the not-for-profit with their own decision making efforts and monitoring of the organization. One of the benefits of nonprofit organizations externally reporting their financials is that they can be compared to similar nonprofit organizations in order to benchmark their performance.
 
What reports are required to be created and provided externally?
 
The emphasis of external financial reporting is to focus on the basic financial information for the organization as a whole. The financial reports that every audited or reviewed nonprofit must provide externally include: Statement of Financial Position, Statement of Activities, Statement of Cash Flows, and Statement of Functional Expenses (required for Voluntary Health and Welfare Organization's only). Although some of the statement names may look confusing, the first two correspond to financial statements with which most are familiar.
              
Statement of Financial Position = Balance Sheet
Statement of Activities = Income Statement
 
With a basic understanding of what the balance sheet and income statement entails, preparing the not-for-profit versions can be quite simple. The Statement of Financial Position will report the organizations assets, liabilities, and net assets, while the Statement of Activities will report the income, expenses and change in net assets.
 
Who sets the standards for reporting financials and what are they?
 
The major body that creates rules and regulations for financial reporting is the Financial Accounting Standards Board (FASB). They have compiled rules and regulations into what is now called the Accounting Standards Codification. The Codification defines, explains, and gives examples for specific rules that organizations must follow and specifically sets aside a section of the codification dedicated solely to not-for-profit organization reporting. The sections in which to find rules relating to external reporting for not-for-profit organizations include ASC 958-205 through 958-280.
 
This is just a brief overview of not-for-profit external reporting.  Upcoming issues will further expound upon what was introduced here.   If you have any questions about this information, give us a call.
WKMR Sponsors Biz Connection Radio Show

WKMR is proud to sponsor the Biz Connection Radio Show, a weekly radio program hosted by Jim Rosetti & Ron Nielsen aimed at the business community. Business owners of large and small companies,  and at all stages of their business life, are guests on the show.

The show is broadcast in the Milwaukee area on WJYI-AM 1340 at 2 p.m. on Sunday afternoons, WJUB-AM 1420 on Saturdays at 8:00 a.m. and WHLB- AM 1330 on Saturdays at 1:00 p.m.  More information on the show and a schedule of upcoming guests can be found at  http://bizconnectionwi.com/index.php .


WKMR Fraud Services

If you suspect fraud may be occurring in your organization, there is action you can take.   At Winter, Kloman, Moter & Repp, S.C. our Certified Fraud Examiners (CFE) can assist you with putting internal controls in place to help prevent and detect fraud.  Our CFEs have the ability to:  
  • Identify the underlying factors that motivate individuals to commit fraud
  • Examine data and records to detect and trace fraudulent transactions
  • Interview suspects to obtain information
  • Write investigation reports
  • Advise clients as to their findings
  • Testify at trial

If you suspect fraud is occurring at your organization or would like help putting internal controls in place, give us a call.

Contact us:


 

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  At Winter, Kloman, Moter & Repp S.C., our not-for-profit team provides quality audit, accounting, tax, and consulting services to a variety of not-for-profit agencies, government funded businesses, private foundations, and assorted charitable organizations. Our experienced team has helped many not-for-profit organizations throughout Southeastern Wisconsin grow and thrive including:

  • Human Service Agencies
  • Cultural & Arts Organizations
  • Charitable & Religious Organizations
  • Educational & Day Care I
  • nstitutions
  • Professional & Trade Associations
  • Assisted Living Facilities
  • HUD/WHEDA Housing Projects
  • Government-funded For-Profit Businesses

We concentrate on helping you best manage public or donated funds, analyzing how to get the most from your resources and helping you implement your plans to stretch every dollar. Our team of professionals understands your complex financial reporting needs, and will help you to accurately report your finances in an understandable way. We provide the independent audit and accounting services required by many of your funding sources by taking a value-added approach, implementing ever-changing tax reporting requirements, providing information technology consulting, and working with every aspect of your organization to support your success.

 

Volume: 7  Issue: 3
In This Issue
 
WKMR

Not-For-Profit Team

 

Mark Potts 

CPA, PFS Shareholder

Paul Sehmer 

CPA 

Shareholder

Lawrence Gebhard 

CPA

Manager

Renee Bardenwerper 

CPA

Manager

Sandy Strelka 

CPA

Supervisor

 

 Jeni Caldwell

CPA 

Supervisor

 

 

 

 Kensie Drinkwine 

Senior

 

Rick Grochowske

CPA

Supervisor


CPA
Senior  
       
Associate


Associate


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