Not-for-Profits have unique accounting and reporting requirements that are though similar to those of non-profits, require substantially more specialized skill and experience in accounting. Many non-profit organizations use easy to acquire and inexpensive accounting software that is not suited for non-profit accounting because it is not written to handle all the needs of nonprofit accounting.

We have found that many nonprofits are using volunteers for bookkeeping and accounting tasks and have run into many problems when the board or grant organizations demand the detailed reports for tracking allocations, unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. It would be wise for a non-profit to at least to engage an experienced CPA firm in setting up or reviewing the records for a nonprofit so the end of year reconcilliations are manageable.

The great demands of non-profit accounting in connection with income transactions and compliance with Financial Accounting Standards Board 117 (FASB117) is the primary guidance relating to the financial statements of not-for-profit organizations (NFPs).

One of the very important sections in FASB117 is the requirement for the Statement of Functional Expenses, and this means that Non-Profits are required to track and report disbursements in a very programtic manner. If the organization is unable to seperate program and supporting services it may run into compliance and reporting problems which at worst could strip it of its tax exempt status and withdrawal of pledge and grant support.

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