ACCOUNTING FOR NON-PROFIT ORIENTED ORGANISATIONS (NPOs)

OUTLINE

Introduction

Classification and Types of NPOs 'Self-sustained' and 'Non Self-sustained' Differences between NPOs and POs

Reference Sources of fund Financial Statements

Purpose of reporting Users of financial statements Types of financial statements

INTRODUCTION

NPOs Oganisations (private / government / semi-private) that provide products and / or services freely or for a minimum price Emphasis on the welfare of the members or community as a whole The organization must be registered Governed by management trustees, sponsors, board, etc. No transferable ownership interest

INTRODUCTION

Classification and Types of NPOs Self-sustained / Non self-sustained Industry / Non industry Private / Government Compulsory / Voluntary Membership Examples of NPOs: universities and colleges hospitals, health associations regulatory bodies art & cultural organizations, museums religious, political & economic bodies welfare organisations labour unions, clubs

'Self-sustained' and 'Non Self-sustained'

'self-sustained'

generate its own fund to finance its activities / services

non self-sustained

depend on funds contributed by the government / other organizations / individuals to finance its activities / services

Differences between NPOs dan POs

1. 2. 3. 4. 5.

Objectives /purpose Source of fund Accounting principles and basis Financial statement Ownership interest

Reference

Guidelines / Regulations / Circulars FASB SFAS 117

Sources of fund

Government, private sectors, individuals Government allocate a certain amount of fund (in the annual budget) to agencies or regulatory bodies established by the government Examples of fund:

Operational / Management fund Development fund Investment fund

Financial Statements

Cash & accrual basis Self-sustained

may use the accrual basis (as used by the POs)

Government-sustained

recording, application for extra fund, and transfer of funds must be in accordance to the pre-determined regulations / standards

Purpose of reporting

Provide info on the managements efficiency & achievement Provide info on use / allocation of fund Provide info on performance of products / services offered

Users of Financial Statements

Contributors of fund Members Creditors Management Authoritative bodies / ministry

Types of Financial Statements

1.

Income statement / Statement of income and expenses / Operational statement / Statement of activities Balance sheet / Statement of financial position Cash flow statement

2. 3.