NPO

Characteristics: (PNFS)

 Public Service
 No profit motive
 Funded by the citizenry
 Stewardship of resources

Similar features w/ business enterprise:

1.) Governed by BOD

2.) Use of Accrual accounting

Fund Accounting Accrual Accounting

Used to organize and manage resources for -recognized depreciation expense on long-lived
various purposes assets, or when assets are recognized as gift or
donation

Financial Statements (present GAAP: shift away from fund reporting to organization as a whole.

 “Equity” account fund balance replaced to “net assets”

 It displays 3 classes of net assets (totally dependent on the existence or absence of donor-
imposed restrictions):
1. Unrestricted – no donor- imposed stipulations.
2. Temporarily restricted- use is limited by donor imposed stipulations (time & purpose
restrictions)
3. Permanently restricted-
 FS required for non government and non for profit organization
o SFP
o Statement of Activities – reports revenues, expenses, gains, losses, and reclassification of
the net assets
o SCF
o Notes
 For Voluntary health and welfare organization:
o Same above + Statement of functional expense
 Accounting for Hospitals
o requires fund accounting on the restrictions imposed;
o classify costs as expenses rather than expenditures;
o use 2 types of funds:
 General fund (unrestricted) – for day to day operations
 Items included:
o Assets whose use is limited
o Agency fund
o PPE for general operations
 Donor-restricted fund (permanently & temporarily restricted)
  Temporary Restricted fund (SEP)
o Specific purpose
o Endowment fund
o Plant Replacement & Expansion fund
 Permanently Restricted fund
 Mere designation cannot make the assets restricted; only the donor can.
 Designation- CAN BE ALTERED w/ discretion of the BOD
 Restriction- CANNOT BE ALTERED by the BOD
 Accounting for Revenues and Expenses
o Revenues & Gains:
1. Patient Service Revenue
 Patient service revenue: recorded gross rates; reported net amounts.
 Charity care revenue: EXCLUDED in gross & net psr; disclosed.
2. Premium Fees (subscriber/ capitation fees)
3. Other Operating Revenue
4. Non-operating revenue- records NOT DIRECTLY RELATED TO PRINCIPAL
OPERATIONS.
 Other Op. & Non-Op can be lump in 1 account “other revenues and gains”
o Operating Expenses:
o Includes functional categories for nursing services, other prof. services, general
services; fiscal services; admin (not expenses; just deductions from gross patient
service revenue)

Accounting for Colleges & Universities

o Types of Funds (CLEAP)

o Current- for primary objectives
o Loan- to be loaned to students, faculty, or staff
o Endowment- OUTSIDE PARTIES contributed not for spending but invested.
o Annuity and Life Income Funds-
o Plant Funds- all A & L W/ FIXED ASSETS
 Unexpended plant funds- SUBDIVIDED (restricted & unrestricted)
 Funds for renewals- SUBDIVIDED (restricted & unrestricted)
 Funds for retirement of indebtedness- SUBDIVIDED (restricted & unrestricted)
 Investment in plant- NOT SUBDIVIDED

Accounting for VHWO:

o Funds used includes:

1. Current funds- unrestricted: ONLY DISCRETION OF BOD needed

Public Support Revenues

inflow w/ NO DIRECT PERSONAL Inflow from a CHARGE FOR SERVICE
BENEFIT
  Expenses
2. Current funds- restricted: ONLY W/ GRANTOR’S SPCIFICATIONS