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SFAS 116 and 117 Presentation Transcript:
1.Not-for-Profit Organizations: SFAS 116 and 117
2.Standards
SFAS #116 – Accounting for Contributions Received and Contributions Made
SFAS #117 – Financial Statements for Not-for-Profit Organizations
3.Key Definitions
Contribution: An unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner.
Promise to Give ("pledge"): A written or oral agreement to contribute cash or other assets to another entity. A promise to give may be either conditional or unconditional.
4.Donor-Imposed Condition: A donor stipulation that specifies a future and uncertain event whose occurrence or failure to occur gives the promisor a right of return of the assets it has transferred or releases the promisor from its obligation to transfer its assets.
Donor-Imposed Restriction: A donor stipulation that specifies a use for the contributed asset that is more specific than broad limits resulting from the nature of the organization, the environment in which it operates, and the purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. A restriction on an organization’s use of the asset contributed may be temporary or permanent.
5.Contributions
Significant source of revenue for most nonprofits.
Defined as: an unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as owner.
6.Recognizing Contribution Revenue
In period received or unconditionally promised
Reported in appropriate net asset category
7.Pledges
Revenues recognized when unconditional pledge is received
Conditional pledges & transfers recognized as revenues when conditions are met
Unconditional pledges due in future years reported as restricted support unless donor specifies it is for current operations
8.Pledges – Unconditional Promises to Give
Recognize receivable if pledges are unconditional promises to give
Does not have provisions that release donor based on future and uncertain event
Conditional promise may be unconditional if occurrence of event is remote
9.Pledges – Conditional Promises to Give
Not reported as receivables
Note disclosure only
Support from conditional promises to give recognized when conditions are met
10.Classes of Net Assets
Unrestricted Net Assets
Temporarily Restricted Net Assets
Permanently Restricted Net Assets
11.Required Financial Statements
Statement of Financial Position (Balance Sheet)
Statement of Activities
Statement of Cash Flows
12.Statement of Financial Position
No specific format required
Fund reporting not prohibited
Aggregated totals for assets, liabilities, and net assets is required, as is reporting the three classes of net assets
Some accounts do have specific requirements
13.Example on Presentation of Net Assets in Statement of Financial Position
14.Statement of Activities
Revenues and gains reported by source
Expenses
Reported by function
Classified as either
Program expenses
General & Administrative expenses
Changes in classes of net assets reported separately
15.Example for a Statement of Activities
SFAS 116 and 117 Presentation Transcript:
1.Not-for-Profit Organizations: SFAS 116 and 117
2.Standards
SFAS #116 – Accounting for Contributions Received and Contributions Made
SFAS #117 – Financial Statements for Not-for-Profit Organizations
3.Key Definitions
Contribution: An unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner.
Promise to Give ("pledge"): A written or oral agreement to contribute cash or other assets to another entity. A promise to give may be either conditional or unconditional.
4.Donor-Imposed Condition: A donor stipulation that specifies a future and uncertain event whose occurrence or failure to occur gives the promisor a right of return of the assets it has transferred or releases the promisor from its obligation to transfer its assets.
Donor-Imposed Restriction: A donor stipulation that specifies a use for the contributed asset that is more specific than broad limits resulting from the nature of the organization, the environment in which it operates, and the purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. A restriction on an organization’s use of the asset contributed may be temporary or permanent.
5.Contributions
Significant source of revenue for most nonprofits.
Defined as: an unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as owner.
6.Recognizing Contribution Revenue
In period received or unconditionally promised
Reported in appropriate net asset category
7.Pledges
Revenues recognized when unconditional pledge is received
Conditional pledges & transfers recognized as revenues when conditions are met
Unconditional pledges due in future years reported as restricted support unless donor specifies it is for current operations
8.Pledges – Unconditional Promises to Give
Recognize receivable if pledges are unconditional promises to give
Does not have provisions that release donor based on future and uncertain event
Conditional promise may be unconditional if occurrence of event is remote
9.Pledges – Conditional Promises to Give
Not reported as receivables
Note disclosure only
Support from conditional promises to give recognized when conditions are met
10.Classes of Net Assets
Unrestricted Net Assets
Temporarily Restricted Net Assets
Permanently Restricted Net Assets
11.Required Financial Statements
Statement of Financial Position (Balance Sheet)
Statement of Activities
Statement of Cash Flows
12.Statement of Financial Position
No specific format required
Fund reporting not prohibited
Aggregated totals for assets, liabilities, and net assets is required, as is reporting the three classes of net assets
Some accounts do have specific requirements
13.Example on Presentation of Net Assets in Statement of Financial Position
14.Statement of Activities
Revenues and gains reported by source
Expenses
Reported by function
Classified as either
Program expenses
General & Administrative expenses
Changes in classes of net assets reported separately
15.Example for a Statement of Activities
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