Arkansas
nonprofit alliance is the not for profit organization that I chose; I reviewed their financial and audit
report for the year 2014. Both the financial and the annual statement are
available in their active website http://www.arkansasnonprofits.org/about/annual-reporting/.
The
statement of financial position conforms with the FASB standards as it shows
the current assets, liabilities and the net assets of this not for profit
organization. It also further shows the specific date at which the financial
state of the organization was at that point. Statement of the activities also
conforms to FASB standards as it reports the revenue, expenses and changes in
assets of the organization. It reports the changes in net assets through
identification of the unrestricted and the temporarily
restricted assets(FASB, 1993).
Cash
flow statement of Arkansas nonprofit alliance for the year ending June 30, 2014, also conforms to the FASB guidance on the
creation of this type of statement. The statement shows the amount of cash used
in investing activities such as acquiring of fixed assets and reinvestment of
interest earned on acertificate of
deposit. Operating cost of this not for profit organization follows FASB
stipulation as it shows all the items not include in financing and investing
activities.
Unrestricted
assets are the assets by thedonor with no
restrictions and thus, can be used by the
organization without adhering to certain regulations imposed by the donor. Temporarily restricted assets in the
organization represent the unspent contributions restricted by the donor or the
awarding agency to be usedfor a certain
period or a particular purpose.
Permanently restricted assets are not found in this organization, but they include contributions an organization is
supposed to hold in perpetuity(Teece, 2004).
The Arkansas nonprofit alliance organization cash flow statement
contains the cash flow from operative activities and the cash flow for
investing activities. Cash flow statements show how companies
and organization have performed in managing cash inflows and cash outflows over
a given period. The cash inflows from
operating activities in Arkansas Nonprofit Alliance for the year ending June
30, 2014,
shows a tremendous increase in cash flow as compared to the previous
year. This operating statement is positive,
and this cash flow is important as it enables the company to meet funding
requirements and contribute to long-term projects and is unlikely to face
liquidity problems in the coming year.
Cash outflows in this not for profit
organization through investing also improved but thelittle amount was used and thus despite investing the company still
has cash to meet shareholder obligations and expenditure necessary for the
smooth running of the organization.
An
indirect format is used by this not for profit organization since the net
income figure obtained by the income statement is
used in the calculation of net income flow from operating activities.
Arkansas nonprofit alliance statement differs from GAAP accounting format regarding listing equity in the balance sheet.
GAAP format lists the stockholders equity while
this format ignores this type of listing and thus the net worth of this
organization is not easy to quantify.
Arkansas
nonprofit alliance recognizes contributions when the donor makes a promise to
give it to the organizational unconditionally. All donor-restricted contributed are reported as increases in
temporarily or permanently restricted net assets depending on the nature of the
restriction. The organization listed the contributions and pledges in the
statement of activities as revenues for the given financial year as stipulated
by the FASB guidelines. Exchange
transactions are not well defined since the transactions from the statement of
activities do not show details of the people or organizations funding the not
for profit organization. However, the
restricted transactions could form part of the exchange transactions since the
donor could be specifying the time and other issues to be part of the agreement
and also adhering. In this case, the
grants that are temporarily restricted
from government and foundations forms the exchange transactions. The two
transactions are therefore different in that contributions can either be
restricted or not while exchange transactions come
with terms which must be met by the organization.
The fiscal condition is the ability of an
organization to meet it financial and service obligations. An organization
which meets these needs is said to be in good fiscal condition while that which
does not is likely to experience problems in running of its operations. Ratios
provide useful information about an organization through revealing information
about debt accumulation and stockpiling of too much inventory. The current ratio is a liquidity ratio
calculated by dividing current assets by the current liabilities of the
company. The ratio obtained from this indicates the company uses its capital
very through project investment and deposit earning,
but the Arkansas nonprofit alliance still needs to settle off their
liabilities. Another liquidity ratio is the quick ratio which measures theability of a company to access finances on
emergency demands. The ratio obtained here is high indicating Arkansas
nonprofit organization has enough capital
that can be important in dealing with emergency cash demand(Commttee, 2013).
From
these financial ratios, we can conclude
that this organization can be stable if it can
meet its obligations but needs to reduce the liabilities by taking either a long-term loan to repay short-term debt.
The fundraising analysis measures the
cost of generating cash through contributions. Programs were allocatedcosts, and they are
summarized on afunctional basis in
the statement of activities. This organization data thus makes it difficult to
calculate its fundraising efficiency. Contributions received by donors and
well-wishers’ are classified based on restrictions associated with them and
also the date kind contributors are reflected by
the date of contribution
Grants
received by this organization are dependent on three foundations and two
government agencies and provides 78% of support to the organization. This
dependency means withdrawal of these grants can lead to organization laying off
some staff or discontinuing some services it offered.
References
Commttee, B. (2013). Basel III: The Liquidity Coverage
Ratio and liquidity risk monitoring tools. Basel Committee on Banking
Supervision, (January), 1–75.
FASB. (1993). Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity Securities. Financial
Accounting Standards Board: Norwalk, Connecticut.
Teece, D. J. (2004). Knowledge and competence as strategic
assets. Handbook on Knowledge Management 1: Knowledge Matters, 40(3),
129–152. http://doi.org/http://dx.doi.org/10.1007/978-3-540-24746-3_7
