Question

Which authoritative body or bodies guide financial reporting for not-for-profits other than governmental entities? Discuss how this works for charities, hospitals, and colleges/universities.

Answer 1

A not-for-profit organization is an organzation that derives its goals from something other than earning a profit. The main intent of an NPO is providing value services.

The Financial Accounting Standards Board (FASB) and the The Governmental Accounting Standards Board (GASB), provides guidance on how to differentiate a governmental organization from a not-for-profit organization. Colleges, universities, hospitals etc. are examples of organizations that may categorise as NPO.

The FASB has had a continuous responsibility for providing guidance on generally accepted accounting principles (GAAP) for NPOss since 1979. However, the GASB is responsible for governmental not-for-profit organizations.

GAAP for not-for-profit organizations recommends

1. Accrual basis accounting

2. A statement of financial position

3. A statement of activities

4. A statement of cash flows

5. Comparative statements are encouraged but not required