Question

Describe the differences in reporting between governmental entities and not-for-profit entities. For example, what are the financial statements for each entity? What measurement focus and basis of accounting do each use?

Answer 1

1-Governement entities and non profit entities are resposible to apply accounting standards to their finanacial reports

government entities are normally use GASB(Government Accounting Standard Board) which contains  “taxpayers, public officials, investors, and others who use financial reports”, specifically for state and local government agencies within the United States

Non profit organisations are using FASB(Financial Accounting Standard Board) contains “investors and others who use financial reports,” essentially any public, private, or nonprofit organization or business.

2-for government entities,financial statement contain Statement of Activities and Statement of Cash Flows and statement of net position.Instead of statement of net position,non profit entities are using statement of financial position.Since both are related to balance sheet and financial position,but the users of the statement are different.In government entities the users are tax payers and for non profit entities the users are those who benefit from non profit organisation.

3-Government entities are required to make CAFR (Comprehensive Annual Financial Report).which contain finacial status of the entity.and it includes past information also.

non profit organisations are not required to make CAFR (Comprehensive Annual Financial Report).but they should publish Report of Consolidated Financial Statements with board of directors and investors, the statement contain Statement of Activities,Statement of Financial Position, and Statement of Cash Flow.