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?
The process whereby a financial institution’s total assets and liabilities are controlled and managed simultaneously in an integrated fashion.
What is Asset-Liability Management?
The new methodology for estimating allowances for credit losses issued by the Financial Accounting Standards Board (FASB).
What is CECL or Current Expected Credit Losses
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?
The weighted average amount of time until the loans made to borrowers and investments or loans received for lending capital held by a NCDFI mature.
What is WAM or Weighted Average Maturity?
The first reporting period following December 16, 2022.
When does CECL apply to NCDFIs?
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?
An average adjusted to reflect the contribution of each loan to the total debt.
What is WAI or Weighted Average Interest?
Information relevant to assessing the collectability of loans receivable which may include internal & external information relating to past events, current conditions, and reasonable and supportable forecasts.
What should be considered when developing a CECL model?
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?
The process of determining the interest rate for granting a loan, typically as an interest spread over a base rate.
What is Loan Pricing?
Snapshot, WARM and Vintage
What is the three most used CECL methodologies?
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?
National Inflation Rate, Unemployment Rate, Recession, Natural Disaster, Health Pandemic, War.
What are examples of external factors for a CECL model?