Fund Accounting

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  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • 10/10/11 CERD Strategic Planning
  • Fund Accounting

    1. 1. 10/10/11 Financial Accounting for NGOs <ul><li>IAS did not mention Fund Accounting </li></ul><ul><li>Initially, the AICPA provided guidelines on this topic but eventually, SFAS 117 (US) does not require reporting financial information by funds for general-purpose financial statements. </li></ul><ul><li>However, annotations to SFAS 117 encouraged not-for-profits to use Fund Accounting as a method of internal recording and reporting </li></ul>FUND ACCOUNTING
    2. 2. 10/10/11 Financial Accounting for NGOs <ul><ul><li>as a system of recording and reporting </li></ul></ul><ul><ul><ul><li>NGOs receive funds under various terms and conditions and may be grouped in various ways based on their intent and purpose and restrictions set by donors and management. Funding sources and funding arrangements may also vary - single fund, co-funding, or multi-funding for either individual activities, individual programs, several programs or the entire organization. </li></ul></ul></ul>FUND ACCOUNTING
    3. 3. 10/10/11 Financial Accounting for NGOs <ul><li>Fund Accounting is a concept peculiar to NGOs </li></ul><ul><li>Accountability, transparency, and monitoring were on the top of the list of reasons why NGOs applied the concept of fund accounting. </li></ul><ul><li>Fund Accounting is also the expression of “matching of sources against intentions” (a fundamental concept in accounting) in NGOs </li></ul>FUND ACCOUNTING
    4. 4. 10/10/11 Financial Accounting for NGOs <ul><li>IPSAS 18 – Segment Reporting </li></ul><ul><li>states that reporting financial information by segments will: </li></ul><ul><ul><ul><li>help users of the financial statements to better understand the entity’s past performance and to identify the resources allocated to support the major activities of the entity; and  </li></ul></ul></ul><ul><ul><ul><li>enhance the transparency of financial reporting and enable the entity to better discharge its accountability obligations. </li></ul></ul></ul>FUND ACCOUNTING
    5. 5. 10/10/11 Financial Accounting for NGOs FUND ACCOUNTING <ul><ul><li>FUNDS: </li></ul></ul><ul><ul><li>Operational Funds </li></ul></ul><ul><ul><ul><li>- Unrestricted Funds </li></ul></ul></ul><ul><ul><ul><li>- Restricted Funds </li></ul></ul></ul><ul><ul><li>___________________________________ </li></ul></ul><ul><ul><li>Revolving Funds </li></ul></ul>
    6. 6. Fund Accounting and its Dimensions 10/10/11 Financial Accounting for NGOs The NGO The NGO C O M P O N E N T F U N D S <ul><li>The organization in relation to its components and the components in relation to the organization, AT THE SAME TIME </li></ul>
    7. 7. 10/10/11 Financial Accounting for NGOs FUND ACCOUNTING <ul><ul><li>DIMENSIONS: </li></ul></ul><ul><ul><ul><li>Based on the agreements with the intended user of the financial statements, like funding agencies (FA), a supporting statement to the Statement of Activities showing, in a matrix form the relationship of the revenues, expenses, and fund balances with respect to each funding source, programs, area of operation, etc., may be prepared. </li></ul></ul></ul>
    8. 8. 10/10/11 Financial Accounting for NGOs It can be a relationship between Funding Agency and Programs: FA 1 FA 2 FA 3 Total Research X X Education X X Training X Livelihood X Total
    9. 9. 10/10/11 Financial Accounting for NGOs Or between Programs and Area of Operation: Area1 Area2 Area3 Total Research X X Education X X Training X Livelihood X Total
    10. 10. 10/10/11 Financial Accounting for NGOs Or could be Area of Operation vis-à-vis Funding Agency Area1 Area2 Area3 Total FA 1 X X FA 2 X X FA 3 X FA 4 X Total
    11. 11. 10/10/11 Financial Accounting for NGOs Other form of relationships may be derived based on the needs of management, donors and other stakeholders. It can also be a multi-dimensional thing. FA 1 FA 2 FA 3 Total <ul><li>Research </li></ul><ul><ul><li>Area1 </li></ul></ul><ul><ul><li>Area2 </li></ul></ul><ul><ul><li>Area3 </li></ul></ul><ul><li>Education </li></ul><ul><ul><li>Area1 </li></ul></ul><ul><ul><li>Area2 </li></ul></ul><ul><ul><li>Area3 </li></ul></ul><ul><li>Training </li></ul><ul><ul><li>Area1 </li></ul></ul><ul><ul><li>Area2 </li></ul></ul><ul><ul><li>Area3 </li></ul></ul><ul><li>Livelihood </li></ul><ul><ul><li>Area1 </li></ul></ul><ul><ul><li>Area2 </li></ul></ul><ul><ul><li>Area3 </li></ul></ul>
    12. 12. 10/10/11 Financial Accounting for NGOs <ul><li>Interfund Transactions </li></ul><ul><li>Treatment of Fixed Assets </li></ul><ul><li>Grants, Donations </li></ul><ul><li>Income Distribution </li></ul><ul><li>Joint Costs and Allocation of Indirect Costs </li></ul><ul><li>Funds created from disbursements charged against Grant (e.g. Credit Revolving Fund, Capital for Income-Generating Projects) </li></ul>Specific Transactions in FUND ACCOUNTING

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