Mind the GAAP: NFP Edition

Overview

Phil Marciano, partner at Citrin Cooperman, outlines the most frequent financial statement pitfalls he encounters while reviewing not-for-profit organizations. He highlights improper classification of assets and lease items, mishandling of conditional versus unconditional contributions, board-designated versus donor-restricted net assets, errors in functional expense and cash-flow presentations, and overlooked non-cash gifts. Marciano stresses robust internal controls, staff training, and vigilant board oversight to avoid these GAAP violations.

Highlights

• financial analysis
• revenue recognition standards
• GAAP compliance
• financial reporting

Prerequisites

None

Objectives

• Identify the relevant FASB Codification topics (e.g., 958, 606, 842) that govern not-for-profit reporting and the situations in which industry-specific guidance overrides general GAAP.
• Distinguish conditional from unconditional contributions and indicate the correct balance-sheet and revenue-recognition treatment for each funding type.
• Recall the required presentation formats for the statement of activities, cash-flow statement, and statement of functional expenses, and recognize the misclassifications that most often appear in practice.
• Select the proper classifications for cash equivalents, leases, board-designated versus donor-restricted net assets, and non-cash gifts, and estimate the internal-control actions needed to prevent related reporting deficiencies.

Preparation

None