Financial Literacy – Part II

By: Jill Palmeter, CPA, Partner (Sep, 2012)

As noted last month in Dermody, Burke & Brown’s “Financial Literacy – Part I” thought leadership email, financial literacy and knowledge of not-for-profit organizations’ management stakeholders are essential in regard to the sustainability of vibrant organizations.  A good place to start is often an organization’s audited financial statements, which could at times look rather intimidating to anyone other than a not-for-profit auditor!

Start with the Statement of Financial Position (a Balance Sheet in the for-profit world). It is a snapshot in time, usually at the end of an organization’s fiscal year.  But why are the previous fiscal year’s numbers there also, and what are assets, liabilities and net assets anyway?  Lots of cash is good, right?  Well, it depends.  How much should we have in reserves?  And there are those unrestricted, temporarily restricted and permanently restricted categories.  What do they mean?  And why are board restricted net assets considered unrestricted by the auditors?

Continue on to the Statement of Activities (Profit & Loss Statement in the for-profit world).  How are revenues and expenses categorized?  Why are expenses always unrestricted? And there are those unrestricted, temporarily restricted and permanently restricted categories again!

A Statement of Cash Flows---why is that even important?

And why do some not-for-profits have a Statement of Functional Expenses while others do not?  And then there are pages and pages of footnote disclosures---why?

 

UPCOMING SEMINAR
Come improve your financial literacy and learn what numbers are most important to you and your organization.  We invite you to attend Dermody, Burke & Brown’s complimentary seminar entitled…

Not-for-Profit Financial Information---Helping you understand, interpret and present the information

Wednesday, October 17, 2012
8:00am - 9:30am
at Dermody, Burke & Brown
443 North Franklin Street
Syracuse, NY 13204

This seminar is designed for:
Executive Directors
Agency Financial Managers
Board Members

Your invitation will be mailed in September...or RSVP today at mld@dbbllc.com.  Seating is limited for this complimentary seminar.


DB&B…Educating to Empower


The information reflected in this article was current at the time of publication. This information will not be modified or updated for any subsequent tax law changes, if any.