This book is designed to help you understand the financial statements of nonprofit organizations. If you are a nonprofit executive or volunteer leader who is not familiar with the formats and language of financial reports, or if you simply wish to brush up on your skills, you will find that this book has been prepared especially for you.
Understanding financial information is vital to managing a successful nonprofit organization. As a nonprofit executive, you know this to be true. If you are a volunteer leader and wish to fulfill your fiduciary responsibility to guide your organization, it is equally important. The best leaders do not lead without this knowledge.
The text is intended to provide you with knowledge that you can apply in carrying out your roles and responsibilities in your organization. To that end, you are encouraged to work through the exercises presented to gain insight into the principal concepts surrounding nonprofit financial statements. The exercises reinforce the concepts presented.
The requirements of nonprofit financial reporting in general have grown increasingly complex over the years. The purpose of financial reporting is to provide the financial story of the organization. With the issuance of the Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, the requirements for how information is presented in nonprofit financial statements have been significantly updated. This edition has been updated to reflect these new requirements and provides explanations and illustrations of many of the new financial statement presentation requirements.
Also, many nonprofit organizations have activities, such as significant federal funding, that require unique reports. These reports and the requirements have also changed as a result of the Office of Management and Budget issuing Title 2 Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). As a result, special materials have been added near the end of the text to provide those interested with the most important information pertaining to these activities and the updated reporting.
A glossary is included at the end of the text to familiarize you with both the common terms associated with nonprofit financial statements and to provide you with a resource for the future. Understanding the language of nonprofit organizations is essential to understanding your organization's financial statements.
By beginning to read this text, you have taken an important first step in increasing your capabilities. When you have finished the text, you will have accomplished something truly worthwhile.