Financial Reporting Options: September 3 What Story Are Your - PowerPoint PPT Presentation

2014 Nonprofit Education and Roundtable Series Financial Reporting Options: September 3 What Story Are Your Financial Reporting Options: What Story Is Financial Reports Telling? Your Financial Reports Telling? September 3, 2014 Presented by: Bobbie Hales, CPA Presented by: Matt Krehe, CPA Bobbie Hales, CPA Matt Krehe, CPA

2014 Nonprofit Why Are We Covering This? Education and Roundtable Series  Accounting standards provide flexibility in September 3 how nonprofit financial statements are Financial Reporting presented Options: What Story Is Your Financial • Learn how you can take advantage of the Reports Telling? flexibility to best tell your story • Follow the rules - understand what the presentation requirements are Presented by: Bobbie Hales, CPA Matt Krehe, CPA

2014 Nonprofit Nonprofit Financial Statements Education and Roundtable Series  Statement of Financial Position September 3 Financial  Statement of Activities Reporting Options: What Story Is Your Financial Reports  Statement of Functional Expenses Telling?  Statement of Cash Flows  Supplemental Financial Information (not Presented by: Bobbie Hales, required) CPA Matt Krehe, CPA

2014 Nonprofit Nonprofit Financial Statements Education and Roundtable Series  The previous statement titles are the most September 3 common Financial Reporting Options:  The standards allow use of other appropriate What Story Is Your Financial Reports Telling? titles for all, except the Statement of Cash Flows (e.g. Balance Sheet, Income Statement) Presented by: Bobbie Hales, CPA Matt Krehe, CPA

2014 Nonprofit Statement of Financial Position Education and Roundtable Series  The standards require the following to be September 3 reported: Financial Reporting Options: • Total assets What Story Is Your Financial Reports • Total liabilities Telling? • Total net assets • Permanently restricted net assets • Temporarily restricted net assets Presented by: • Unrestricted net assets Bobbie Hales, CPA Matt Krehe, CPA

2014 Nonprofit Statement of Financial Position Education and Roundtable Series September 3 Financial Reporting Options: What Story Is Your Financial Reports Telling? Presented by: Bobbie Hales, CPA Matt Krehe, CPA

2014 Nonprofit Statement of Financial Position Education and Roundtable Series Reporting Options: September 3 Financial Reporting  Classified statement not required Options: What Story Is Your Financial  Investments may be reported as current or Reports Telling? noncurrent assets or both  Cash designated for long-term may be included with investments  Unrestricted net asset designations may be Presented by: Bobbie Hales, CPA broken out on statement Matt Krehe, CPA

2014 Statement of Financial Position Nonprofit Education and Roundtable Series Classified Example  If statement is not September 3 classified, liquidity of Financial Reporting assets and liabilities Options: What Story Is Your Financial required to be disclosed Reports Telling? by: • Sequence according to nearness of conversion to cash Presented by: or use of cash. Bobbie Hales, CPA • Disclosure of Matt Krehe, liquidity/maturity in CPA the footnotes.

2014 Nonprofit Statement of Financial Position Education and Roundtable Series Reporting Options: September 3  Investments may be reported as Financial Reporting Options: current, noncurrent assets, or both What Story Is Your Financial Reports Telling? • If intended use is long-term – report as noncurrent assets  Provides clarity to user of financial statements Presented by:  This will help with prevent perception that Bobbie Hales, CPA the nonprofit has abundant operating Matt Krehe, assets and doesn’t need additional CPA funding

2014 Nonprofit Statement of Financial Position Education and Roundtable Series Reporting Options: September 3  Cash designated for long-term may Financial Reporting Options: What Story Is be included with investments. Your Financial Reports Telling? • Many nonprofits keep a portion of their investment portfolio in cash • You do not need to classify the cash portion of investment portfolio as cash in your Presented by: Bobbie Hales, financials CPA Matt Krehe, CPA

2014 Nonprofit Statement of Financial Position Education and Roundtable Series Reporting Options: September 3  Unrestricted net asset designations Financial Reporting Options: What Story Is may be broken out on statement Your Financial Reports Telling? • Provide clarity on liquidity of net assets • Provide additional information to financial statement users Presented by: Bobbie Hales, CPA Matt Krehe, CPA

2014 Statement of Financial Position Nonprofit Education and Roundtable Series Unrestricted Break-Out Example September 3  By breaking out the Financial Reporting Options: unrestricted net What Story Is Your Financial assets, the Reports Telling? organization has shown that the majority of its net assets are tied-up in property and Presented by: equipment. Bobbie Hales, CPA Matt Krehe, CPA

2014 Statement of Activities Nonprofit Education and Roundtable Series The standards require the following to be reported: September 3 Financial  Gross revenues and expenses for ongoing major or Reporting Options: What Story Is central activities Your Financial Reports  Total change in net assets Telling?  Change in permanently restricted net assets  Change in temporarily restricted net assets  Change in unrestricted net assets Presented by: Bobbie Hales, CPA Matt Krehe, CPA

2014 Nonprofit Statement of Activities Education and Roundtable Series Reporting Options: September 3 Financial Reporting  Columnar vs. Single Column Presentation Options: What Story Is Your Financial  Optional reporting of operational Reports Telling? income/loss  Expenses may be presented functionally or naturally, or hybrid Presented by:  Revenue and expenses from special events Bobbie Hales, CPA can be reported net or gross Matt Krehe, CPA

2014 Statement of Activities Nonprofit Education and Roundtable Series Columnar vs. Single Column Presentation September 3 HUMAN SERVICES, INC. HUMAN SERVICS, INC. Financial STATEMENT OF ACTIVITIES STATEMENT OF ACTIVITIES Reporting YEAR ENDED JUNE 30, 2013 YEAR ENDED JUNE 30, 2013 Options: UNRESTRICTED NET ASSETS: What Story Is REVENUES: Your Financial Government service contracts $ 13,210,000 Temporarily Permanently Reports Fees for service activities and programs 3,248,711 Unrestricted Restricted Restricted Total Telling? Foundation grants and contributions 1,000,000 REVENUES, SUPPORT AND INCOME: Net assets released from restrictions 6,415,526 Government service contracts $ 13,210,000 $ 13,210,000 23,874,237 Total revenues Fees for service activities and progra 3,248,711 3,248,711 Foundation grants and contributions 1,000,000 $ 3,990,480 $ 38,948 5,029,428 EXPENSES: Investment income 2,726,416 2,726,416 Program services: Net assets released from restrictions 6,415,526 (6,415,526) Adult services 12,795,452 5,454,749 Children services Total revenues 23,874,237 301,370 38,948 24,214,555 Total program services 18,250,201 Supporting services: EXPENSES: 4,209,607 General and administrative Program services: Fundraising expenses 72,542 Adult services 12,795,452 12,795,452 Total supporting services 4,282,149 Presented by: 5,454,749 5,454,749 Children services Total expenses 22,532,350 Total program services 18,250,201 18,250,201 1,341,887 INCREASE IN UNRESTRICTED NET ASSETS Bobbie Hales, Supporting services: CPA TEMPORARILY RESTRICTED NET ASSETS: General and administrative 4,209,607 4,209,607 Foundation grants and contributions $ 3,990,480 Fundraising expenses 72,542 72,542 Investment income 2,726,416 Matt Krehe, Total supporting services 4,282,149 4,282,149 Net assets released from restrictions (6,415,526) CPA Total expenses 22,532,350 22,532,350 301,370 INCREASE IN TEMPORARILY RESTRICTED NET ASSETS PERMANENTLY RESTRICTED NET ASSETS: INCREASE IN NET ASSETS 1,341,887 301,370 38,948 1,682,205 Foundation grants and contributions 38,948 INCREASE IN NET ASSETS 1,682,205 NET ASSETS, Beginning of Year 1,630,889 17,415,011 37,518,281 56,453,929 NET ASSETS, Beginning of Year 56,453,929 NET ASSETS, End of Year $ 2,972,776 $ 17,716,381 $ 37,557,229 $ 58,136,134 NET ASSETS, End of Year $ 58,136,134

2014 Nonprofit Statement of Activities Education and Roundtable Series Reporting Options: September 3  Optional reporting of operational Financial Reporting Options: income/loss What Story Is Your Financial Reports • Benefits: Telling?  Provides for a better year-to-year comparison of results  Can be used to indicate level of reliance on investment income Presented by:  Eliminates impact of items that cannot be Bobbie Hales, CPA budgeted, one-time items, or that are out of the Matt Krehe, organization’s control CPA

2014 Statement of Activities Nonprofit Education and Roundtable Series Optional reporting of operational income/loss With “operational” reporting No separate “operational” reporting September 3 Financial Reporting Options: What Story Is Your Financial Reports Telling? Presented by: Bobbie Hales, CPA Matt Krehe, CPA