Accounting and Reporting for Not-for-Profit Organizations

Case Study 16

Common Financial Statement Mistakes

Learning objective

• Identify common presentation errors or omissions in a fictitious set of financial statements of a not-for-profit (NFP).

Case study

The staff accountant has prepared the set of financial statements found on the following pages for your review. Using your understanding of accounting and financial statement errors and omissions, respond to the following questions.

The following excerpts from the 2020 AICPA Audit and Accounting Guide Not-for-Profit Entities will be helpful in responding to the case study questions.

• 3.28 The FASB ASC glossary defines net assets without donor restrictions as the part of net assets of an NFP that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants). FASB ASC 958-210-45-11 explains that information about self-imposed limits is useful, including information about voluntary resolutions by the governing board of an entity,¹ such as resolutions to designate a portion of its net assets without donor restrictions to function as an endowment (sometimes called a board-designated endowment fund) or to designate a portion for a specific future expenditure (called board-designated net assets). Information about the amounts and purposes of board designations of net assets without donor restrictions should be provided in the notes to or on the face of financial statements. In addition, FASB ASC 958-205-45-13A states ...