19-19-11
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Not-For-Profit Entities 19
Electronic Presentation by Douglas Cloud
Pepperdine University
Baker / Lembke / KingBaker / Lembke / King
19-19-22
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Special-Purpose Government EntitiesSpecial-Purpose Government Entities
GASB 33 established specific reporting requirements for each of the following types of special-purpose governments:a. Engaged in more than one governmental program
or that have both governmental and business-type activities.
b. Engaged in a single government program (such as a cemetery district).
c. Engaged in only business-type activities (such as a public university).
d. Engaged in only fiduciary-type activities.
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Financial Reporting: Private NFP EntitiesFinancial Reporting: Private NFP Entities
C. Alt donated $40,000 to a not-for-profit organization to be used specifically for a research program.
C. Alt donated $40,000 to a not-for-profit organization to be used specifically for a research program.
Cash 40,000Contributions 40,000
When the research expenditures were made in the unrestricted net asset class, a reclassification entry
would be made in the temporarily restricted net asset class to record the completion of the specific use.
When the research expenditures were made in the unrestricted net asset class, a reclassification entry
would be made in the temporarily restricted net asset class to record the completion of the specific use.
Reclassification--Satisfaction of Program Restriction 40,000
Cash 40,000
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Entries are required in the unrestricted net asset class.Entries are required in the unrestricted net asset class.
Cash 40,000Reclassification--Satisfaction of Programs
Restriction 40,000
Financial Reporting: Private NFP EntitiesFinancial Reporting: Private NFP Entities
Expense--Research Program 40,000Cash 40,000
19-19-55
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Colleges and Universities--Special ConventionsColleges and Universities--Special Conventions
In cases of university-sponsored scholarships, revenue is credited at the
full standard rate for tuition. The scholarship is then
recorded as an expenditure.
In cases of university-sponsored scholarships, revenue is credited at the
full standard rate for tuition. The scholarship is then
recorded as an expenditure.
Revenue and Expenditure RecognitionRevenue and Expenditure Recognition
Tuition and fees are primary revenue sources
for the unrestricted current fund.
Tuition and fees are primary revenue sources
for the unrestricted current fund.
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Revenue and Expenditure RecognitionRevenue and Expenditure Recognition
If a student withdraws and receives a partial reimbursement of tuition
and fees, debit revenues from tuition and fees, and credit cash or
accounts payable.
If a student withdraws and receives a partial reimbursement of tuition
and fees, debit revenues from tuition and fees, and credit cash or
accounts payable.
Colleges and Universities--Special ConventionsColleges and Universities--Special Conventions
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When an academic term begins in one academic term and ends in
another, revenue is recognized in the fiscal year in which the term is
predominantly conducted.
When an academic term begins in one academic term and ends in
another, revenue is recognized in the fiscal year in which the term is
predominantly conducted.
Colleges and Universities--Special ConventionsColleges and Universities--Special Conventions
Revenue and Expenditure RecognitionRevenue and Expenditure Recognition
19-19-88
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Transfers and Board-Designated FundsTransfers and Board-Designated Funds
Mandatory transfers are transfers out of the current funds group to other funds resulting from binding legal agreements on financing or renewals and replacements
of education plants, and from grant agreements with agencies of the federal government, donors, and others.
Mandatory transfers are transfers out of the current funds group to other funds resulting from binding legal agreements on financing or renewals and replacements
of education plants, and from grant agreements with agencies of the federal government, donors, and others.
Nonmandatory transfers are discretionary transfers specified by the governing board for a variety of purposes. Nonmandatory transfers may also be made from the loan,
endowment, or annuity funds to the current funds.
Nonmandatory transfers are discretionary transfers specified by the governing board for a variety of purposes. Nonmandatory transfers may also be made from the loan,
endowment, or annuity funds to the current funds.
19-19-99
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Public Colleges and UniversitiesPublic Colleges and Universities
The GASB has specified that public colleges and universities must
follow the accounting and financial reporting standards as used for other
governmental entities.
The GASB has specified that public colleges and universities must
follow the accounting and financial reporting standards as used for other
governmental entities.
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The three financial statements required by the FASB for private, not-for-profit colleges and universities are:
The three financial statements required by the FASB for private, not-for-profit colleges and universities are:
(1) Statement of financial position
(2) Statement of activities
(3) Statement of cash flows
Private Colleges and UniversitiesPrivate Colleges and Universities
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• General• Specific purpose• Time Restricted• Plant replacement and expansion• Endowment
Hospital AccountingHospital Accounting
Fund Groups
Restricted
Uses accrual accounting
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Overview of Hospital Accounting/Reporting Overview of Hospital Accounting/Reporting
Specific Purpose FundsSpecific Purpose Funds
Contributions, transfers, and other changes are recorded directly in the fund. Resources are held until transferred to general fund for expenditures.
Resources restricted for specific operating purposes.
Accounting basis
Distinguishing features
Financial statements
Balance SheetStatement of OperationsStatement of Changes in Net AssetsStatement of Cash Flows
19-19-1313
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Time Restricted FundsTime Restricted Funds
Contributions, transfers, and other changes are recorded directly in the fund. Resources are held until transferred to general fund for expenditures.
Resources not available until date specified by donor.
Distinguishing features
Accounting basis
Financial statements
Balance SheetStatement of OperationsStatement of Changes in Net AssetsStatement of Cash Flows
Overview of Hospital Accounting/Reporting Overview of Hospital Accounting/Reporting
19-19-1414
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Plant Replacement and Plant Replacement and Expansion FundsExpansion Funds
Contributions, transfers, and other changes are recorded directly in the fund. Resources are held until transferred to general fund for expenditures.
Resources restricted for addition to plant assets.
Overview of Hospital Accounting/Reporting Overview of Hospital Accounting/Reporting
Distinguishing features
Accounting basis
Financial statements
Balance SheetStatement of OperationsStatement of Changes in Net AssetsStatement of Cash Flows
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Endowment FundsEndowment Funds
Contributions, transfers, and other changes are recorded directly in the fund. Resources are held until transferred to general fund for expenditures.
Principal must be preserved.
Overview of Hospital Accounting/Reporting Overview of Hospital Accounting/Reporting
Distinguishing features
Accounting basis
Financial statements
Balance SheetStatement of OperationsStatement of Changes in Net AssetsStatement of Cash Flows
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amounts due from patients third-party payorsother insurers of health carepledges or grants interfund transactions
amounts due from patients third-party payorsother insurers of health carepledges or grants interfund transactions
Balance SheetBalance Sheet
Receivables may include--
Receivables should be reported at the anticipated
realizable amount.
Receivables should be reported at the anticipated
realizable amount.
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Balance SheetBalance Sheet
Investments are initially recorded at cost if purchased, or at fair value at the date of receipt
if received as a gift.
Investments are initially recorded at cost if purchased, or at fair value at the date of receipt
if received as a gift.
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Balance SheetBalance Sheet
Property, plant, and equipment is reported,
together with any accumulated depreciation. Depreciation is recorded in
the general fund.
Property, plant, and equipment is reported,
together with any accumulated depreciation. Depreciation is recorded in
the general fund.
Separate disclosure should be made for assets that have
restrictions placed on their use by the donor or have been
designated by the board of directors for special use.
Separate disclosure should be made for assets that have
restrictions placed on their use by the donor or have been
designated by the board of directors for special use.
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Balance SheetBalance Sheet
Long-term debt is shown in the balance sheet. This differs from most governmental
entities in which a separate debt service fund is established to
service debt.
Long-term debt is shown in the balance sheet. This differs from most governmental
entities in which a separate debt service fund is established to
service debt.
The net asset are segregated between those which are unrestricted, temporarily
restricted, and permanently restricted.
The net asset are segregated between those which are unrestricted, temporarily
restricted, and permanently restricted.
19-19-2020
McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
• Net patient service revenue– Revenue from inpatient and outpatient care.
• Contractual adjustments– A deduction from revenue based on contracts with third-party payors in the medical
reimbursement process.• Income from ancillary programs
– Income from television rentals, cafeteria sales, sales in the gift shop, parking fees, and educational program’s tuition.
• Interfund transfers– Release of restricted funds to unrestricted status when the stipulations set by the
donor have been met.• General fund expenses
– Expenditures for nursing and other professional services, depreciation, bad debts, and administrative costs.
Statement of OperationsStatement of Operations
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create or enhance nonfinancial assets, or
require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.
DonationsDonations
FASB 116 requires donated services to be recognized if the services received --
19-19-2222
McGraw-Hill/ Irwin Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Donated assets are reported as contributions in the statement of operations, if unrestricted.
Restricted donated assets are reported as contributions to the temporarily restricted funds in the period received.
Donated assets are reported at fair market value at the date of contribution:
When the restriction no longer applies, the net
assets released are reported in the
unrestricted fund.
When the restriction no longer applies, the net
assets released are reported in the
unrestricted fund.
Donations
19-19-2323
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General FundGeneral Fund
The hospital provides patient services of $2,600,000 measured at standard rates.
The hospital provides patient services of $2,600,000 measured at standard rates.
Accounts Receivable 2,600,000Patient Services Revenue 2,600,000
Gross charges at standard rate.
From this amount, $240,000 is deducted for contractual adjustments with third-party payors.
From this amount, $240,000 is deducted for contractual adjustments with third-party payors.
Contractual Adjustments 240,000Accounts Receivable 240,000
Deductions from gross revenue for contractual adjustments.
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General FundGeneral Fund
The hospital receives income in 20X2 from providing nonpatient services that include
operating a cafeteria and gift shop and from vending machine commissions.
The hospital receives income in 20X2 from providing nonpatient services that include
operating a cafeteria and gift shop and from vending machine commissions.
Cash 30,000Revenue from Cafeteria Sales 20,000Revenue from Gift Shop Sales 4,000Revenue from Vending Machine
Commissions 6,000Income from ancillary services.
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The hospital incurs $2,600,000 in operating expenses. Cash payments are made of $2,125,000.
The hospital incurs $2,600,000 in operating expenses. Cash payments are made of $2,125,000.
Nursing Services Expense 800,000Other Professional Services Expense 620,000General Services Expense 700,000Fiscal Services Expense 100,000Administrative Service Expense 80,000Medical Malpractice Costs 30,000Bad Debts Expense 60,000Depreciation Expense 200,000
Cash 2,125,000Allowance for Uncollectibles 60,000Inventories 90,000Prepaid Expenses 5,000Accumulated Depreciation 200,000Accounts Payable 50,000Accrued Expenses 30,000Estimated Medical Malpractice Costs Payable 30,000
General FundGeneral Fund
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General FundGeneral Fund
The hospital receives donated services valued at $10,000.The hospital receives donated services valued at $10,000.
Other Professional Services Expense 10,000Donated Services Revenue 10,000
Receive donated services.
During 20X2, the hospital received unrestricted cash gifts in the amount of $63,000 and donated medicines and
medical supplies with a market value of $30,000.
During 20X2, the hospital received unrestricted cash gifts in the amount of $63,000 and donated medicines and
medical supplies with a market value of $30,000.
Cash 63,000Contributions--Unrestricted 63,000
Unrestricted contributions received.Inventory 30,000
Contributions--Unrestricted 30,000Donated supplies received.
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General FundGeneral Fund
During 20X2, income of $10,000 was earned in the unrestricted fund on resources designated by the
governing board for purposes of future plant expansion.
During 20X2, income of $10,000 was earned in the unrestricted fund on resources designated by the
governing board for purposes of future plant expansion.
Board Designated Funds for Expansion of Facilities--Cash 10,000
Investment Income--Board Designated Funds 10,000Earnings resources reserved by hospital’sgoverning board for purchase of fixedassets.
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Equipment costing $100,000, with a book value $50,000, was sold for $55,000.
Equipment costing $100,000, with a book value $50,000, was sold for $55,000.
Cash 55,000Accumulated Depreciation 50,000
Property, Plant, and Equipment 100,000Gain on Disposal of Equipment 5,000
Sale of hospital equipment. The cashwill be used in the operations of thehospital.
General FundGeneral Fund
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General FundGeneral Fund
Funds are received from a specific-purpose fund totaling $120,000, for
education and research.
Funds are received from a specific-purpose fund totaling $120,000, for
education and research.
Cash 120,000Net Assets Released from Program Use
Restrictions 120,000Record payment for reimbursement of operating expenditures made in accordance with restricted gift.
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The remaining transactions during the 20X2 fiscal year affect only balance sheet accounts. Typical of these transactions are collections of
receivables and acquiring inventory.
The remaining transactions during the 20X2 fiscal year affect only balance sheet accounts. Typical of these transactions are collections of
receivables and acquiring inventory. Cash 2,250,000Allowance for Uncollectibles 50,000
Accounts Receivable 2,300,000Collect some receivables and write-off$50,000 as uncollectible.
General FundGeneral Fund
Collected $2,250,000 on receivables and wrote off $50,000 in accounts as uncollectible. Also,
acquired inventory that cost $50,000.
Collected $2,250,000 on receivables and wrote off $50,000 in accounts as uncollectible. Also,
acquired inventory that cost $50,000.
Inventories 50,000Cash 50,000
Acquire inventories.
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Plant and Expansion FundPlant and Expansion Fund
During the year, equipment with a fair value of $25,000 was donated to the hospital.
During the year, equipment with a fair value of $25,000 was donated to the hospital.
Property, Plant, and Equipment 25,000Contributions--Plant 25,000
Received donated equipment with a fairvalue of $25,000.
A $60,000 cash donation was received for the purpose of acquiring additional equipment.
A $60,000 cash donation was received for the purpose of acquiring additional equipment.
Cash 60,000Contributions--Plant 60,000
Received restricted gifts for use to acquire equipment.
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Endowment FundEndowment Fund
A total of $415,000 in new permanent endowments is received and $400,000 is used to
acquire additional investments.
A total of $415,000 in new permanent endowments is received and $400,000 is used to
acquire additional investments.
Cash 415,000Contributions--Permanent Endowment 415,000
Receive additional endowments.
Investments 400,000Cash 400,000
Acquire additional investments.
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• Statement of financial position
• Statement of activities
• Statement of cash flows
• Statement of functional expenses
• Statement of financial position
• Statement of activities
• Statement of cash flows
• Statement of functional expenses
Voluntary Health and Welfare OrganizationsVoluntary Health and Welfare Organizations
Financial statements for a VHWO:
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Cemeteries Civic organizations Fraternal organizations Labor unions Libraries Museums Other cultural institutions Performing arts
organizations Political parties
Cemeteries Civic organizations Fraternal organizations Labor unions Libraries Museums Other cultural institutions Performing arts
organizations Political parties
Other Not-for-Profit EntitiesOther Not-for-Profit Entities
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Cemeteries Civic organizations Fraternal organizations Labor unions Libraries Museums Other cultural institutions Performing arts
organizations Political parties
Cemeteries Civic organizations Fraternal organizations Labor unions Libraries Museums Other cultural institutions Performing arts
organizations Political parties
Other Not-for-Profit EntitiesOther Not-for-Profit Entities
Private and community foundations
Private elementary and secondary schools
Professional associations Public broadcasting
stations Religious organizations Social and country clubs Trade associations
Private and community foundations
Private elementary and secondary schools
Professional associations Public broadcasting
stations Religious organizations Social and country clubs Trade associations
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Chapter NineteenChapter Nineteen
The The EndEnd