What Fun...Accounting..
A system designed to ensure funds are used productively, for the benefit of the organization and stakeholders, and as the grantor intended.
What is Fund Accounting?
Not a specific type of expense, but rather a way of looking at how the organization spent its revenue, according to the cost center.
What are functional expenses?
A fundamental building block of sound financial management for an organization that serves as a guide for financial activity in the year ahead.
What is a Non-Profit Operational Budget?
Identifying customer, identifying performance obligations, determining transaction price, allocating price to performance, and recognizing revenue when performance obligations are met.
What is the 5-step process to determine contract revenue?
Auditors will evaluate whether revenue recognition complies with the guidelines in differentiating between contributions and exchange transactions.
What is during the audit process?
Organizations who focus on accountability instead of profitability.
What organizations use Fund Accounting?
Three categories used to complete Form 990, such as Program Services, Management and General Administration and Development or Fundraising.
What is a function?
Expected revenue and the expected expenses separated and allocated by each funding source and broken down into cost centers.
What are components of a Non-Profit Operational Budget?
Resources provided to a non-profit with instructions to distribute the resource to designated recipients.
What are Pass Through Transactions?
Provides guidance to non-profit managers and auditors on what needs to be disclosed about the assumptions made in revenue recognition.
What is FASB ASU 2016-14?
Each grant has its own revenue and expenses balance, independent of each other. They are then combined to form financial statements.
How does fund accounting work?
To file form 990, to pass an independent audit, to build public trust.
Why does an organization need to track functional expenses?
Defined activities, specific time periods, realistic & measurable metrics.
What are the features of an effective Non-Profit Budget?
Advance payments an organization receives for products or services to be delivered or performed in the future.
What is Unearned Revenue or Refundable Advances?
One benefit of this extra effort will be as all organizations begin reporting under these guidelines, greater consistency among non-profits will enable a better evaluation of how a particular organization compares with its peers.
What are guidelines for in differentiating between contributions and exchange transactions?
Separate revenues and expenditures “buckets” that help to keep the funds organized.
What are the “funds” in fund accounting?
By a process of dividing costs between all the functions directly or indirectly related to the cost.
How are functional expenses allocated?
Agree on financial goals, develop a draft of revenue and expenses, verify program and organizational goals can be met and present to board of directors for approval.
What are the 4 main phases of operational budget development?
Revenue from the lines of business in which a NCDFI is specifically engaged, such as fees for lending and training, development services, and interest charged on loans.
What is Earned Revenue?
Non-profits can expect their Statement of Activities and Statement of Financial Position to look different from past financial statements.
What is by complying with guidelines in differentiating between contributions and exchange transactions?
It helps track the use of funds, reports to IRS, honors funder restrictions and ensure the organization has funds to continue operations.
Why is fund accounting important?
A matrix-style report showing the breakdown of functional expenses in an easy-to-read table.
What is a Statement of Functional Expenses?
Budgets are a living document, include the organization’s grants, contracts, and agreements, use as many details as needed, be realistic, consider fixed and necessary costs first.
What are Operational Budget – Tips and Best Practices?
Nominal fees charged to recipients for services produced through funded programs.
What is Program Service Revenue?
A simple but effective tool comparing the interest and principal earned per year on loans made to borrowers to the interest and principal paid on funds per year received from investors.
What is Principal and Interest Cash Flow model?