Article Archives >> Behind the Numbers >> October 1-15, 2005
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Behind the Numbers:
The Problem with Nonprofit Accounting Rules
By Eric Fraint, President
Your Part-Time Controller, LLC
In 1993 the Financial Accounting Standards Board (FASB) did something which since then has caused problems for nonprofit organizations all over the country: they issued Statement of Financial Accounting Standards #116, Accounting for Contributions Received and Contributions Made.
Among the provisions of this accounting rule is a requirement that an organization recognize as revenue a grant or pledge in the period the grant or pledge was made, assuming the grant or pledge contained no donor-imposed conditions. Though the revenue will be unrestricted or restricted depending on the donor’s stipulations, it is nevertheless recorded as revenue even though the cash from the grant or pledge may come in a later period, and even though the purpose or time period for which the grant was given may also occur in a future period.
Article Archives >> Behind the Numbers >> October 1-15, 2005
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