Financial Reporting and Analysis for Non-profits
Expert-defined terms from the Professional Certificate in Financial Management for Non-profits course at Stanmore School of Business. Free to read, free to share, paired with a globally recognised certification pathway.
Accountability refers to the responsibility of non #
profit organizations to their stakeholders, including donors, beneficiaries, and the public, to ensure that they are transparent and accountable for their actions and use of resources. This concept is closely related to transparency and governance in non-profit organizations. In the context of financial reporting and analysis, accountability involves providing accurate and reliable financial information to stakeholders, as well as being responsive to their concerns and questions.
Accrual accounting is a method of accounting that recognizes revenues and… #
This approach is based on the matching principle, which matches revenues with the expenses incurred to generate those revenues. In non-profit organizations, accrual accounting is used to provide a more accurate picture of financial performance and position, as it takes into account unearned revenues and prepaid expenses.
Activity #
based costing is a method of costing that assigns costs to activities or projects based on their usage of resources. This approach is useful in non-profit organizations, as it helps to identify areas where costs can be reduced or optimized. By assigning costs to specific activities or projects, non-profit organizations can make more
Annual report is a comprehensive report that provides an overview of a no… #
The annual report typically includes a narrative section, financial statements, and appendices. The report is used to communicate with stakeholders, including donors, beneficiaries, and the public, and to provide transparency and accountability for the organization's actions and use of resources.
Asset is a resource that is owned or controlled by a non #
profit organization, and is expected to provide future benefits. Examples of assets include cash, investments, property, and equipment. In the context of financial reporting and analysis, assets are classified as current or non-current, depending on their liquidity and expected lifespan.
Audit is an independent examination of a non #
profit organization's financial statements and internal controls. The audit is conducted by a certified public accountant (CPA) or a licensed public accountant (LPA), and is designed to provide assurance that the financial statements are accurate and reliable. The audit report is typically included in the annual report and is used to provide transparency and accountability for the organization's financial management.
Budget is a financial plan that outlines a non #
profit organization's expected revenues and expenses for a specific period of time. The budget is used to allocate resources, make financial decisions, and evaluate performance. In non-profit organizations, budgets are typically approved by the board of directors or governing body, and are used to ensure that the organization is operating within its means and achieving its goals.
Cash flow is the inflow and outflow of cash and cash equivalent… #
Cash flow is critical to the survival and sustainability of non-profit organizations, as it enables them to pay bills, invest in programs, and build reserves. In the context of financial reporting and analysis, cash flow is typically reported in the statement of cash flows, which provides a detailed picture of the organization's cash inflows and cash outflows.
Charity is a type of non #
profit organization that is established to benefit a specific cause or group of people. Charities are typically tax-exempt and are regulated by the government. In the context of financial reporting and analysis, charities are required to disclose their program expenses, administrative expenses, and fundraising expenses in their financial statements.
Consolidated financial statements are combined financial statements that… #
Consolidated financial statements are used to provide a comprehensive picture of the organization's financial performance and position, and are typically required for large and complex non-profit organizations.
Cost allocation is the process of assigning costs to specific p… #
Cost allocation is used to identify areas where costs can be reduced or optimized, and to make
Donation is a gift of money , goods , or services to a… #
Donations are typically tax-deductible and are used to support the organization's programs and activities. In the context of financial reporting and analysis, donations are reported as revenues in the statement of activities, and are typically restricted or unrestricted, depending on the donor's intentions.
Endowment is a fund that is established to support a non #
profit organization's programs and activities in perpetuity. Endowments are typically invested and the income is used to support the organization's mission. In the context of financial reporting and analysis, endowments are reported as net assets in the statement of financial position, and are typically restricted or unrestricted, depending on the donor's intentions.
Expense is a cost that is incurred by a non #
profit organization to achieve its mission and objectives. Expenses are typically reported in the statement of activities, and are categorized as program expenses, administrative expenses, or fundraising expenses.
Financial analysis is the process of examining and interpreting a… #
Financial analysis is used to evaluate the organization's financial performance and position, and to make
Financial management is the process of planning, organizing , and <… #
Financial management involves budgeting, forecasting, financial reporting, and financial analysis, and is critical to the success and sustainability of non-profit organizations.
Financial reporting is the process of preparing and presenting a n… #
Financial reporting is used to communicate with stakeholders, including donors, beneficiaries, and the public, and to provide transparency and accountability for the organization's financial management.
Financial statement is a document that provides a snapshot of a no… #
Financial statements typically include a statement of financial position, a statement of activities, and a statement of cash flows.
Fund accounting is a method of accounting that is used by non #
profit organizations to track and report on specific funds or restrictions. Fund accounting is used to ensure that resources are used in accordance with donor intentions and restrictions, and to provide transparency and accountability for the organization's financial management.
Fundraising is the process of soliciting and securing funds … #
Fundraising is a critical component of non-profit organizations, as it provides the resources needed to achieve their mission and objectives.
Generally accepted accounting principles (GAAP) are a set of standards th… #
GAAP is used to ensure that financial statements are accurate, reliable, and consistent, and to provide transparency and accountability for the organization's financial management.
Grant is a type of funding that is provided by a foundation … #
Grants are typically restricted to specific purposes or projects, and are used to support the organization's mission and objectives.
Internal control is a system of policies , procedures , and <… #
Internal control is critical to the success and sustainability of non-profit organizations, as it helps to prevent fraud, abuse, and mismanagement of resources.
Investment is a type of asset that is held by a non #
profit organization to generate income or appreciation in value. Investments can include stocks, bonds, real estate, and other securities, and are typically managed by a professional investment manager or committee.
Liability is a debt or obligation that is owed by a non #
profit organization to a creditor or other party. Liabilities can include accounts payable, loans, leases, and other debt obligations, and are typically reported in the statement of financial position.
Net asset is a type of asset that represents a non #
profit organization's equity or net worth. Net assets can include unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets, and are typically reported in the statement of financial position.
Non #
profit organization is a type of organization that is established to serve a public benefit or charitable purpose. Non-profit organizations are typically tax-exempt and are regulated by the government. In the context of financial reporting and analysis, non-profit organizations are required to disclose their financial information and governance practices to stakeholders.
Operating budget is a financial plan that outlines a non #
profit organization's expected revenues and expenses for a specific period of time. The operating budget is used to allocate resources, make financial decisions, and evaluate performance. In non-profit organizations, operating budgets are typically approved by the board of directors or governing body, and are used to ensure that the organization is operating within its means and achieving its goals.
Program evaluation is the process of assessing and evaluating a no… #
Program evaluation is used to identify areas for improvement, make
Program expense is a type of expense that is incurred by a non #
profit organization to deliver its programs and services. Program expenses can include salaries, benefits, travel, and other operating expenses, and are typically reported in the statement of activities.
Revenue is a type of income that is earned by a non #
profit organization from its programs, services, and activities. Revenues can include donations, grants, fees, and other sources of income, and are typically reported in the statement of activities.
Risk management is the process of identifying, assessing , and m… #
Risk management is critical to the success and sustainability of non-profit organizations, as it helps to prevent losses, damage, and reputational harm.
Statement of activities is a financial statement that provides a detai… #
The statement of activities is used to evaluate the organization's financial performance and position, and to make
Statement of cash flows is a financial statement that provides a detai… #
The statement of cash flows is used to evaluate the organization's liquidity and financial stability, and to make
Statement of financial position is a financial statement that provides a… #
The statement of financial position is used to evaluate the organization's financial stability and position, and to make
Tax #
exempt is a status that is granted to non-profit organizations that are exempt from paying income taxes on their revenues. Tax-exempt organizations are typically regulated by the government and are required to disclose their financial information and governance practices to stakeholders.
Transparency is the quality of being open and honest in all… #
Transparency is critical to the success and sustainability of non-profit organizations, as it helps to build trust with stakeholders and to demonstrate accountability for the organization's actions and use of resources.
Unrestricted net asset is a type of net asset that represents a no… #
Unrestricted net assets can be used to support the organization's programs and activities, and are typically reported in the statement of financial position.