Accounting for Governmental & Nonprofit Entities

accounting for governmental & nonprofit entities

Fund accounting is typically not a topic enjoyed by people who are used to the concepts of for-profit accounting. If you are at all familiar with the analysis of for-profit financial statements, analyzing the financial statements of a nonbusiness organization shouldn’t be too much of a stretch, once you understand what each statement is supposed to be. Nonprofit organizations report using accrual basis accounting and Financial Accounting Standards Board and GAAP standards. Nonprofits straddle the fence somewhere between the private sector and government. Because they are not out to make a profit, fund accounting provides the best accounting system for most nonprofit organizations. The same fundamental ideas apply for nonprofit accounting as governmental accounting—the goal is to have annual expenditures end up very close to annual revenues.

The CAFR analyzes the financial status of the entity, and is put together using the GAAP and GASB. Our advice is to contact your financial institution and verify the correct billing information. You may want to ask about any failed transactions and inquire as to the status of those funds. Another reason may be that you have a used textbook and the code is no longer valid.

Accounting for Governmental & Nonprofit Entities,

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accounting for governmental & nonprofit entities

Therefore, using the approach for analyzing each phase of this process in non-profit organizations, some main recommendations are summarized. Tammy R. Waymire, PhD, CPA, is the MTSU Accounting Advisory Board Outstanding Professor of Accounting at the Jennings A. Jones College of Business at Middle Tennessee State University in Murfreesboro, TN. She teaches undergraduate and graduate governmental and nonprofit accounting courses and intermediate accounting. She received her bachelor’s degree from Arkansas Tech University, her MBA from Harding University, and her PhD from the University of Arkansas. With the amount of money we pay in taxes each year, it is madness to not look at a governmental financial statement just as you would for any other substantial investment. Donating money blindly without making sure that it’s getting to those who need it is the same thing.

Navigating Government and Nonprofit Financials

The CAFR can include overall financial data as well as information on specific funds and reports the results of the period in question, often the financial year. The CAFR also includes consolidated financial statements and includes accumulations from previous years. While many investors have at least some understanding of typical financial statements like the balance sheet, income statement and cash flow statement, governmental and nonprofit financial statements may be significantly less familiar. These
problems provide students
with the opportunity to discover the issues with audit quality
in the government and nonprofit sectors, as well as
the timing lag from fiscal
year-end to filing of the audit

  • This problem includes
    assignments for four governmental funds
    and an enterprise fund.
  • He has published articles in the Accounting Review, Accounting Horizons, the Journal of Accounting and Public Policy, and the Journal of Public Budgeting, Accounting, and Financial Management, among others.
  • Another reason may be that you have a used textbook and the code is no longer valid.
  • It is a comprehensive governmental and not-for-profit accounting text written for students who will be auditing and working in public and not-for- profit sector entities.
  • An instructor has
    flexibility in choosing
    both the topics that are covered and the amount of time devoted to a particular topic.
  • This allows students and faculty to quickly grasp the chapter contents and to
    efficiently navigate to the desired
  • For several years, she was the principal author of two PPC Thomson practitioner guides on governmental accounting and financial reporting—Preparing Governmental Financial Statements under GASBS No. 34 and Governmental Financial Statement Illustrations and Trends.

In the second edition,
we embrace the power of technology in the learning process. Although the print textbook can be used on its own, we created
extensive digital resources
that integrate with and complement the print book. The
emphasis in our approach is to
provide students with a review
problem for each deliberately selected, key learning objective. In this
students see the application of concepts
through a step-by-step illustration
and then
have the opportunity to immediately
practice similar assignments electronically in myBusinessCourse (MBC), our online homework platform. In addition,
MBC contains many instructional videos that were created by the authors. The combination of textbook, videos, and
online practice
comprise an active learning system that recognizes and embraces how today’s students
prefer to learn
and provides students
with the tools to master governmental and nonprofit accounting.


Chapter 16 is comprehensive
in its coverage of auditing the wide range of governmental and nonprofit organizations covered throughout the text. Illustrations in this chapter also use real examples of audit reports and
findings. CAFRs often present financial information for individual funds (or at least significant funds) as well as governmentwide financial statements that show the position of the government as a whole.

accounting for governmental & nonprofit entities

Government and nonprofit organizations aren’t interested in making money, so they use an accounting system called fund accounting. Fund accounting essentially groups financial data together into funds or accounts that share a similar purpose. This way, the organization has a better idea of what resources it has available to complete a specific task.

Detailed Reporting Tools

Don’t forget, though, that a surplus is not a profit, nor is a deficit a loss—governments aren’t in the business of hoarding money (nor are they “in business” at all, as it were). Unlike a for-profit company, if a government finds itself operating at a large surplus (profit), it will usually take steps to lower the tax burden for its residents. Below are the 3 major differences between nonprofit and government accounting processes. Increased scrutiny of corporate actions in today’s business climate puts pressure on all facets of business to adhere to ethical practices founded on principles that are honest, fair and transparent to the stakeholders (Turner, 2010). The importance of business ethics becomes essential in the entrepreneurial setting. Consumer word of mouth and viral internet communications are just a few ways that a negative ethical image could ruin a small business.

We attempt to cover the basic accounting
and financial reporting principles in as comprehensive a manner as possible. To keep the text practical
and “real world,” we enhanced the discussion of the principles with numerous
illustrations drawn from financial
reports prepared by actual governments and nonprofit organizations. We cover the
latest accounting
standards issued by the standards-setting bodies. Finally, we designed
the end-of-chapter questions,
exercises, problems,
and cases specifically to help students better understand the material covered in our text. This text has a comprehensive governmental accounting problem in Appendix A for instructors who like to reinforce
the discussion of accounting principles
with a problem that considers
concepts learned in multiple chapters.

Every chapter opens with a grid that identifies each learning objective
for the chapter, the related pages, eLecture
and Guided Example videos, and end-of-chapter assignments. This allows students and faculty to quickly grasp the chapter contents and to
efficiently navigate to the desired
topic. Connect®
Course management, reporting, and student learning tools backed by great support. Governments treat our money in a distinctive way—they’re not trying to make a profit. Ideally, a government wants expenditures to be very close to revenue in any given year. Differences between revenues and expenditures are called surpluses (a positive difference) or deficits (a negative difference).

Dr. Waymire has served in leadership roles in academic
organizations, participates in standard-setting
activities, and routinely
speaks at academic
and professional conferences. At MTSU and at Northern
Illinois University where she began her academic career, Dr.
Waymire has earned awards for excellence in teaching and research. Every year, government organizations must put together a CAFR (Comprehensive Annual Financial Report).

However, the way in which they operate, organize financial information, and report on their data differ greatly. He received his bachelor’s degree from Midwestern State University, a master’s degree from the governmental accounting University of North Texas, and a PhD from Texas Tech University. Nonprofits typically do this through their fund accounting software, as most solutions include templates that make reporting easier to read.

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