NONPROFIT FINANCIAL STATEMENTS Nonprofit Financial Management College of

NONPROFIT FINANCIAL STATEMENTS Non-profit Financial Management College of Public and Community Service University of Massachusetts at Boston © 2010 William Holmes 1

WHO DETERMINES REQUIRED NONPROFIT FINANCIAL STATEMENTS? • • GAAP—Generally Accepted Accounting Principles; IFRS, International Financial Reporting Standards; IASB, International Accounting Standards Board US GAAP—FASB, Financial Accounting and Standards Board (general); GASB, Governmental Accounting Standards Board (state and local government); FASAB, Federal Accounting Standards Advisory Board 2

TYPES OF FINANCIAL STATEMENTS Budgets Profit-Loss Statement— Income Statement, Activity Statement Balance Sheet—Statement of Financial Position Cash Flow Statement 3

NONPROFIT BUDGETS Spending plan for specified period Broken down by functional categories Consider direct and indirect expenses Uses cost or accrual accounting 4

NONPROFIT ACTIVITY STATEMENT Compares income versus expenses Compares for a period of time Includes functional categories of income and expense Indicates financial health of organization 5

NONPROFIT BALANCE SHEET Summarizes status of organization at a point in time Compares assets with liabilities Accounts for how assets are balanced with liabilities Identifies issues regarding assets or liabilities 6

NONPROFIT CASH FLOW STATEMENT Describes handling of income and expenses Determines net result of cash flow Identifies issues in cash management Identifies potential future financial problems 7