Although you probably have a general understanding of accounting principals, you might not be familiar with the way in which non-profits present their financial statements. These statements are presented in a very unique way. The following are the statements issued by non-profits:
The Statement of Financial Position is similar to the Balance Sheet used by for-profit companies as it lists the values of all assets and debts owed. However, the Statement of Financial Position reports the non-profit’s net assets in place of equity. The net assets are broken down into the following restrictions:
The Statement of Activities comes next and replaces the Income Statement used by for-profit companies. The Statement of Activities is used to report any changes to permanently restricted, temporarily restricted, and unrestricted net assets.
The Statement of Cash Flows is used by non-profit organizations in the same way as for-profit companies. This statement shows the flow of cash in and out of the organization. This statement helps identify which activities generate and use cash.
The Statement of Functional Expenses details all expenses incurred by the organization. These expenses are separated by program services and support services such as management, administration, fundraising, and programs. This statement shows how each functional area of the organization incurs expenses.
Vault Consulting offers outsourced accounting and financial management services for non-profit organizations. We understand that the tax laws and regulations regarding non-profits are complex and can be difficult to understand. Our team has the skills and experience needed to maintain or heal the financial health of your organization.
When you work with Vault Consulting, we help you to develop a plan that is customized to your organization’s needs. We evaluate your current accounting and financial reporting operations to discover areas that could benefit from improvement. Please contact us for more information.