Financial Accounting for Local and State School Systems: 2014 Edition Chapter 5: Financial Reporting Financial Statements

statement of activities

Joseph Scarano is the CEO of Araize, Inc., developers of cloud-based FastFund Online Nonprofit accounting, fundraising and payroll software solutions to help your nonprofit become more transparent, accountable and sustainable. The purpose of managing your cash flow is to make sure that you have enough cash to pay current bills. Functional areas typically include programs, fundraising, and management and administration. A budget represents what your nonprofit expects to spend and earn over a specified time period. The most significant change involves changes in financial reporting and these are incorporated into 4.3.5, Fiduciary Funds Financial Statements. A new section was added to discuss and clarify concepts related to accounting and reporting of contingencies and litigations. This is an early implementation of GASBS 89, Accounting for Interest Cost Incurred before the End of Construction Period which is applicable for reporting periods beginning after December 15, 2019.

In addition to MD&A, this Statement requires budgetary comparison schedules to be presented as RSI along with other types of data as required by previous GASB pronouncements. The summary of significant accounting policies may also need to be modified slightly to incorporate the disclosure requirements of GASB Statement 46, Net Assets Restricted by Enabling Legislation—An Amendment of GASB Statement No. 34. Specifically, the amount of the district’s net position at the end of the reporting period deemed to be restricted by enabling legislation should be disclosed. Activities reported in enterprise funds and internal service funds .

Report a Concern

Many citizens—regardless of their profession—participate in the process of establishing the original annual operating budgets of state and local governments. Governments will be required to continue to provide budgetary comparison information in their annual reports. An important change, however, is the requirement to add the government’s original budget to that comparison. Many governments revise their original budgets over the course of the year for a variety of reasons. Requiring governments to report their original budget in addition to their revised budget adds a new analytical dimension and increases the usefulness of the budgetary comparison. However, we believe that the information will be important—in the interest of accountability—to those who are aware of, and perhaps made decisions based on, the original budget. It will also allow users to assess the government’s ability to estimate and manage its general resources.

statement of activities

Expenses are shown by major program activity, management, and fundraising. Showing expenses by activity clearly demonstrates how your organization spends its resources toward accomplishing mission activities. We recommend getting in touch with an accountant to help with these activities. Your organization can save time, energy, and money by using an outsourced accounting resource to help with your statement of activities. You’re required by FASB 117 to report your expenses by functional classification, meaning you’ll need to at least split up your expenses by administrative, fundraising, and program expenses. The expenses your organization incurs should all support your mission in some way, whether that’s by funding daily nonprofit operations or a specific project relevant to your mission’s purpose.

Exploring The Statement of Activities: A Beginner’s Guide

Used to show how expenses are incurred for each functional area of a nonprofit entity. Net Assets – organization’s net worth at a specific period of time. The calculation of net assets is your Assets minus your Liabilities. There are no new reporting requirements and the update expands the current prescription. All general revenues, including taxes, should be reported net of estimated refunds and uncollectible amounts.

  • Expanded the title and the definition to include internet services as authorized by Chapter 186, Laws of 2018.
  • We recommend getting in touch with an accountant to help with these activities.
  • Segment disclosures are not required for an activity in which the only outstanding debt is conduit debt for which the entity has no obligation beyond the resources provided by related leases or loans.
  • Internal service funds also should be reported in the aggregate in a separate column on the proprietary fund statements.

They are reported separately because this way users can better predict future cash flows – irregular items most likely will not recur. Income tax expense – sum of the amount of tax payable to tax authorities in the current reporting period (current tax liabilities/ tax payable) and the amount of deferred tax liabilities . I would think that “Net assets without donor restrictions” would be misleading to the users. Nonprofit accounting differs from business accounting, because nonprofits don’t exist to make profits.

Nonprofit Financial Health Check: Are You Prepared to Weather Uncertainty?

The FASB117 requires that the statement be divided into functional categories like maintenance, salaries, schools, etc. Net cost of services – for services that the government provides that are not self-supporting. These services rely on tax revenue for support, like emergency services, road repairs, or schools and parks. Let’s go over three aspects of government accounting that are a good indication of the areas where the government has to cut spending, or start to take in more money for a growing program. Costs directly tied to raising money, including special event costs, advertising, and fundraising staff salaries.

  • When combined with income from operations, this yields income before taxes.
  • Proprietary fund statements of net position and revenues, expenses, and changes in fund net position should be presented using the economic resources measurement focus and the accrual basis of accounting.
  • The nonprofit statement of activities is one of the core accounting documents that your organization creates.
  • The following income statement is a very brief example prepared in accordance with IFRS.
  • After that time elapses, they can be released from restriction and used as the nonprofit sees fit.

Expenses in a matrix, which includes both the natural and functional expenses by program, according to FASB Statement 117. Your nonprofit works to accomplish its mission, and when it comes to communicating that to donors and external stakeholders, no document is as helpful as a statement of activities. With this kind of detailed information, it’s easy to see why a statement of activities is something that needs to be created and maintained for your organization.

The net effect of the revenues, expenses, gains, losses and reclassifications is labeled change in net assets. The change in net assets must be the same as the difference between the beginning and ending balance of net assets as reported in the statement of financial position. Nonprofits must compile their statement of activities to be in accordance with the generally accepted accounting principles . However, it’s more than just a requirement for nonprofit organizations. This statement can be incredibly helpful when nonprofits are analyzing their finances and trying to determine where those hard-earned fundraising dollars seem to disappear to. A nonprofit statement of activities with functional expenses will list all the programs under the expense section. Expenses might include salaries, office supplies, utilities, and other costs for each program.

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