FASB 117The FASB developed a GAAP called FASB 117. It states that 501(c)(3) organizations must account for contributions made and received. Contributions must be accounted for on financial statements in the period that the revenue is earned. If it is a non-cash donation, the business must record it at its market value. Contributions made to other organizations are considered expenses and also must be recorded in the period that they are incurred.
May 17, 2009 Typically, current assets include: cash and cash equivalents, equity investments, bonds or CD’s with original maturities of less than 1 year, prepaid expenses and accounts/grants/pledges receivables that are expected to be collected within one year. Reporting Requirements for Annual Financial Reports of State Agencies and Universities General Accounting. Statement of Cash Flows Application. Present a statement of cash flows (SOCF) for all proprietary and internal service funds based on the provisions of GASB 9, as amended by GASB 34. Note: A statement of cash flows is not required for component units.
Financial statements must distinguish between contributions that permanently and temporarily increase net assets. They must also disclose any donor-imposed restrictions and conditions. Operating and InvestingThe 501(c)(3) organizations oversee and protect the contributions of their donors. Due to this and their tax exempt status, they are subject to higher standards for operating and investing.
Many organizations choose to invest their earnings as well as support charitable missions. Financial statements must show how money is invested and the missions it supports.
Not for profit agencies can only support charitable missions that society approves of and places a high value on. Financial StatementsGAAP requires that all 501(c)(3) organizations provide specific financial statements disclosing their operating activities.
Businesses must provide a balance sheet, statement of activities, statement of cash flows and an income statement. The balance sheet shows total assets, liabilities and net assets. Changes in the firm's assets and liabilities should be listed on the statement of activities. The statement of cash flows reports cash and cash equivalents. The income statement lists net income, revenues and expenses.
FASB 117Another accounting principle for 501(c)(3) organizations, known as FASB 117, requires them to classify their assets, revenues, expenses, gains and losses. Many times donors will place stipulations on how and when money is spent. The classifications or stipulations can be permanent, restricted or temporarily restricted. The classifications are listed in a statement of financial position. The statement must show the amount and type of restriction. Changes in amounts are displayed in a statement of activities.