Account Non Profit

Accounting and Finance forNon-Profit Organizations 1 Table of Contents Page Part 1 – 1 hour (1 –2 PM) Basic Accounting - Optional 1. Cash Accounting and the Bank Reconciliation 2. Accrual Accounting – Payables and Receivables 3. Capital Assets and Inventory 4. Accounting for Revenues – an Overview 5. Simply Accounting and Quickbooks Demonstration 6. Working Papers and Adjusting Entries 3 4 13 15 17 18 Part 2 7. 8. 9. 10. 11. 12. - 1.5 hours (2:15 – 3:45) Accounting for the GST – 10 minutes Accounting for Payroll – 15 minutes Other Reporting to CRA, and the Alberta Government – 30 minutes Internal Controls – 15 minutes Budgets, Business Plans and Performance Measures – 20 minutes Other Resources and Final Questions – 5 minutes 32 37 46 38 53 62 Part 3 13. 14. 15. 16. 17. 18. 19. - 1 hour (4 –5 PM) Advanced Financial Accounting - Optional An Overview of the Canadian Accounting System for NPOs Reporting Entity Fund Accounting Expense Recognition Revenue Recognition The Statement of Changes in Net Assets and Cash Flows Wrap Up: Options available for NPOs 63 67 69 75 80 84 90 2 1. Cash Accounting and the Bank Reconciliation The bank statement – debits and credits Using a synoptic journal to do your accounting – the Toy Club 3 Synoptic Date Item Jan 1/05 Balance Forward Jan-06 Transfer (to chequing) Bank Debit Credit Transfer to/from Chequing Control total 1000.00 200.00 .00 0.Savings Account .00 1000.00 200 0.00 200.00 Total debits less credits 800.00 200.00 Balance per bank statement 800. Toy Club - Synoptic Chequing Account accounting on a cash basis Date Item 01-Jan-05 01-Jan-06 10-Jan-05 11-Jan-05 11-Jan-05 17-Jan-05 28-Jan-05 30-Jan-05 Description Balance Forward Transfer (from savings) Donations Cheque 1 toy purchase Cheque 2 toy purchase Cheque 3 delivery Cheque 4 photocopies Donations Total debits less credits Bank Debit Bank Credit Credit Debit Cr Dr 500.00 200.00 1000.00 Bank statement Disbursements Donations Cr Office Dr Toy Purchases Dr Delivery Dr 200.00 1000.00 650.00 345.00 122.00 65.00 650.00 345.00 122.00 65.00 500.00 500.00 1182.00 2200.00 200.00 1500.00 1018.00 outstanding cheques cheque 2 Receipts Transfer from Savings Cr 345.00 1363.00 65.00 995.00 122.00 Control total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Toy Club Statement of Financial Position Cash Basis January 31 Assets Cash - Chequing Cash - Savings $ 1,018.00 800.00 $ 1,818.00 Net Assets Unrestricted net assets 1,818.00 $ 1,818.00 Toy Club Statement of Operations Cash Basis Month Ending January 31 Receipts Donations $ 1,500.00 Disbursements Office Toy purchases 65.00 995.00 Delivery 122.00 1,182.00 Increase in Cash 318.00 Cash, beginning of month Cash, end of month 1,500.00 $ 1,818.00 Accrual Accounting – Receivables and Payables Why use accrual accounting? When are amounts receivable? When are amounts payable and when do we record accrued liabilities? The Toy Club general ledger – sample accruals .2.recording the subsequent payments 4 .setting up a receivable and payable . 00 0.00 0.00 Liabilities Deferred Net Assets Accounts Payable Contributions Boys Girls Toys Toys Revenues Unrestricted Net Assets Donations Expenses Office Toy Distributions Delivery Control total -1500.00 .00 122.00 0.00 650.00 65.00 0.00 345.00 500.00 Donations Cheque 1 toy purchase Cheque 2 toy purchase Cheque 3 delivery Cheque 4 photocopies Donations Payables delivery Receivables promised donation Inventory distributions Deferred Cont recognize rev Totals 800.00 -1500.00 0.00 outstanding cheques cheque 2 Bank statement 345.00 -345.00 122.00 Contributions Toy Chequing Receivable Inventory 500.00 800.00 0.00 0.Toy Club General Ledger Date 01-Jan-05 01-Jan-06 10-Jan-05 11-Jan-05 11-Jan-05 17-Jan-05 28-Jan-05 30-Jan-05 31-Jan-05 31-Jan-05 31-Jan-05 31-Jan-05 Assets Item Description Savings Balance Forward 1000.00 -500.00 0.00 1018.00 -650.00 -500.00 0.00 Transfer (from savings) -200.00 -600.00 -400.00 -65.00 1363.00 995.00 0.00 200.00 0.00 0.00 -400.00 0.00 0.00 -122.00 1000.00 65.00 0.00 -600. 00 Transfer (from savings) -200.00 -300.00 65.00 650.00 0.00 0.00 -500.00 0.00 400.00 400.00 -122.00 122.00 .00 0.00 65.00 267.00 1000.00 Deferred -145.00 -400.00 345.00 200.00 Control total -1500.00 -500.00 -100.00 145.00 1018.00 0.00 0.00 -1200.00 -65.00 0.00 Donations Cheque 1 toy purchase Cheque 2 toy purchase Cheque 3 delivery Cheque 4 photocopies Donations Payables delivery Receivables promised donation Inventory distributions Deferred Cont recognize rev Totals 800.00 -1500.00 0.00 595.Toy Club General Ledger Date 01-Jan-05 01-Jan-06 10-Jan-05 11-Jan-05 11-Jan-05 17-Jan-05 28-Jan-05 30-Jan-05 31-Jan-05 31-Jan-05 31-Jan-05 31-Jan-05 Assets Item Description Savings Balance Forward 1000.00 -400.00 -400.00 100.00 500.00 0.00 0.00 Bank statement Net Assets Accounts Payable Contributions Boys Girls Toys Toys Unrestricted Net Assets Donations Revenues Expenses Office Toy Distributions Delivery -600.00 outstanding cheques cheque 2 Liabilities 300.00 Contributions Toy Chequing Receivable Inventory 500.00 -145.00 300.00 -650.00 0.00 300.00 1363.00 345.00 800.00 0.00 -345. 00 Deferred Contributions Toy donations 600.968.00 $ 2.713.818.00 Contributions Receivable 300.Toy Club Statement of Financial Position January 31 Assets Cash $ 1.00 Inventory 595.00 Net Assets Unrestricted net assets 1.00 $ 2.00 .00 Liabilities Accounts Payable $ 145.713. 00 Net Assets.00 .00 Delivery 267.968.00 Toy Distributions 400.Toy Club Statement of Operations Month Ending January 31 Revenues Donations $ 1. beginning of month Net Assets.00 $ 1.00 Increase in Net Assets 468.00 732.500.00 Expenses Office 65.200. end of month 1. Do we need to account for it and why? Journal entries made to the Toy Club 13 .3. What is inventory? Consumable inventory and inventory held for resale. Accounting for Capital Assets and Inventory What is a capital asset? Do we need to account for them and why? The Alternatives. Accounting in the financial statements – Canadian Foodgrains Bank example. Recording the asset purchase and depreciation. 2.Capital Assets Current policy is to capitalize or gross revenues > $500. Determine useful life for each class and amortize. amount (furniture. age. Provide note 1. 14 . Determine disclosure threshold (description.000? NO YES Set Policy Expense: Capitalize: 1. land) -Non-depreciable -Depreciable 3. Set classes useful life. expensed in period) computer equipment. building. Contract revenues are recognized over the period of the contract.” as in the for-profit world. Accounting for Revenues – an Overview The accounting rules are complex and discussed in greater detail in the advanced financial accounting session. “commercial like” revenues are recognized when “earned. Under the deferral method. You have the option of accounting for contributed materials and services. restricted donations and grants are recognized when received or receivable. Example: Canadian Foodgrains Bank There is another method of accounting for restricted contributions. The basic principles however are that sales and service type. unless expenses are unclear then the revenues and expenses are deferred.4. 15 . and at their value. which we will discuss in the advanced section. The primary method of accounting for contributions is the deferral method of accounting for contributions. You must account for contributed capital assets. 859 $ 3.143 $ 21.831 Statement of Operations .288.563.Assets Current assets: Cash and short-term investments Receivables and prepaid expenses Grain inventory Land Capital assets $ 17.Year ended March 31.040 107.207.20$ .831 Liabilities.142 3.632.139 60. 2003 2003 Revenue Cash donations Grain donations 2002 $ 4.039 127.119.275 $ 20.119. Tw09363.878.62 224.1est 0.864.139 3.885.372.051 8.498 10.752 $ 21.270. Deferred Contributions and Net Assets Current liabilities: Accounts payable and accrued liabilities Deferred contributions Net assets: Restricted Unrestricted $ 1. project report for the Toy Club Quickbooks .5. cash basis in Quickbooks .reversing entries in Simply .deceptive bank reconciliations .more typical NPO type default accounts in Quickbooks . Simply Accounting and Quickbooks Demonstration Simply Accounting .the reports that can be produced .income summary by class for the Toy Club Differences between the Software .Simply is more widely accepted among NPOs Other software and accounting options 17 .an overview of the modules in Simply Accounting .accrual vs.no account codes in Quickbooks . cheques. because we want all revenue earned in the year recorded in the proper period. and result in less costly audits • May be needed to support future audits A lead schedule should be prepared that lists the account balances included in each financial statement category. 18 . Year-End Working Papers and Adjusting Entries Working papers document the support for year end balances. ie outstanding deposits. This should be referenced to the supporting documentation for year end balances. even if not paid. and transfers • there may be uncorrected bank errors left on the reconciliation • The accounting needs to adjusted for all other reconciling amounts including unrecorded interest or service charges Investments • The lead schedule should be supported by investment certificates • Accrue interest. and • Are useful for review by the board and management • Are useful for the auditor.6. Cash and Investments Cash • Bank reconciliations are needed for all bank accounts • The only items remaining on a bank reconciliation should be those reconcling items required to facilitate an accrual basis of accounting for cash. Lead Schedule Cash Bank 1 Bank 2 Bank 3 Total Cash $150.00 $200.00 Cash total on Financial Statements $450.00 19 .00 $450.00 $100. *There should not be any other reconciling items. unless there is an error on the bank statements.Bank Reconciliation Any Not-for-profit December 31 Balance per bank $200 Add/Subtract Outstanding cheques $ 50 Outstanding deposits $0 Outstanding transfers $0 Other reconciling items* $? Balance per general ledger $150 Outstanding transfers would be transfers between accounts. 20 . All other reconciling items should be adjusted in preparing the year-end statements. 25% interest .99 accrued interest 21 .24 Interest Accrual Investment 1 .25 accrued interest Investment 2 .2% interest .25%) x 12/12 $11.526.Year-end December 31.014. 2002 .2. 2002 (Amount X Interest Rate) X # months held / 12 months (500 X 2. 2002 Investment GIC #1 GIC #2 Total Amount $ 511.Year-end December 31. 2002 . 2002 (1.000 X 2%) X 9/12 $14.99 $1.Investments Any Not-for-profit December 31.25 $1.Purchased April 1.Purchased January 1. 00 22 . letter) Accounts Receivable Any Not-for-profit December 31 Name GST Receivable John Doe Total Current 100 100 30-60 30 30 60-90 0 > 90 0 Total 100 30 130 Total per G/L $130.Accounts Receivable and Contributions Receivable Accounts Receivable • Usually not substantial. except where there is significant sales and service revenue • An aged accounts receivable listing may be useful if substantial receivables exist Contributions Receivable • Grants or pledges that are promised but not received • Should have documentary evidence that pledges existed at year end (eg.00 Contributions Receivable Any Not-for-profit December 31 Name Amount When Pledged Nancy Roo 100 November 5 Kent Talkman 50 December 1 Total 150 Description Purchase of new theater supplies Purchase of new theater supplies Total per G/L $150. and rent • Insure prepaids set up in the previous fiscal year are expensed if appropriate • List of all prepaid and supporting calculations Prepaid Expenses Any Not-for-profit December 31 Prepaid Amount Insurance 200 Rent Total 2000 2200 Calculation $2400 X 1/12 months (Feb 1 – Jan 31) record Jan insurance as prepaid Last months rent. and recorded as assets • Examples: prepaid insurance.Prepaid Expenses • Expenses paid for in advance are prepaid expenses. January rent Total per G/L $2.000 January’s rent was paid on December 31 October 1 entry: DR rent expense DR prepaid rent CR cash December 31 entry: DR prepaid rent 1000 CR cash 1000 1000 1000 2000 To record October rent expense and last months rent as prepaid To record January’s rent as prepaid 23 . Moved into your new office on October 1 Signed a one-year lease Paid your first and last months rent All other payments had to be made before the first of the month Monthly rent is $1.200 Prepaid Rent Example • • • • • • • Year-end Dec 31. amortization rate.Capital Assets • Capital assets provide a service or benefit that is used up over an extended period of time • Recommend that you keep a record or list of capital assets even when such assets are expensed • A listing should include: whether the asset was donated or purchased. date put into service. description. and cost/fair value 24 . fair value Office desks 01-Jan-02 P Filing Cabinets 01-Jan-01 Total Office Furniture 1/5 1/5 P 1/3 Computers 01-Jan-01 Total Office Equipment Additions Disposal Ending Cost s 375 200 200 300 300 375 Opening Amort Amort Ending Amort Net Book Value 375 200 575 0 40 40 75 40 115 75 80 155 300 120 420 300 300 100 100 100 100 200 200 100 100 Policy is to take full year's amortization in the year of acquisition and none in the year of disposal. 2002 Donated / Purchased Description Date put in Service Amort Opening Rate Cost D . 25 .Capital Asset Listing Any Not-for-Profit December 31. This should be documented. 26 . the ending balances of unspent and unamortized contributions should be supported by letters from donors and other supporting documentation Restricted contributions need to be accounted for regardless of whether they are included in ending restricted fund balances or deferred contributions. Similarly.Restricted Contributions • • • It is important to account for the use of contributions that have been restricted as contributions are governed by trust law Restricted contributions need to be accounted for throughout the year to ensure conditions are met by the organization. Deferred Capital Contributions Deferred Contributions For Youth Work For Youth Worker's Salaries 3000 500 3500 For New Admin Building For Vehicles 5000 2000 7000 Unamortized Deferred Capital Contributions Description Opening Ending Deferred Deferred Capital Capital Contributions Additions Disposals Contributions Date put in Amort Service Rate Office desks 01-Jan-02 Total Office Furniture 1/5 0 375 375 Ending Unamortized Deferred Capital Ending Amort Contributions Opening Amort Amort 375 375 0 0 75 75 75 75 300 300 Capital Assets Donated / Purchased Description Date put in Amort Service Rate Opening Cost D . 27 .fair value Office desks 01-Jan-02 P Filing 01-Jan-01 Cabinets Total Office Furniture 1/5 1/5 P 1/3 Computers 01-Jan-01 Total Office Equipment Additions Disposals Ending Cost 300 300 Net Book Ending Amort Value 375 375 200 0 40 75 40 75 80 300 120 375 575 40 115 155 420 300 300 100 100 100 100 200 200 100 100 200 200 Opening Amort Amort Policy is to take full year's amortization in the year of acquisition and none in the year of disposal. looking for invoices for work that was completed at the year end.Payables. The bill is dated January 7th. You ordered some office supplies on December 15th. and goods received by the year end To accrue or not to accrue: 1. review them to see if any relate to work that has been completed by the year-end but no invoice has been received ƒ Review invoices received after the year-end. Do I accrue this bill? 28 . Accrued Liabilities An account payable is a liability that arises when an invoice is received at the year end and unpaid • Insure all invoices received and not paid by the fiscal year end are recorded in the year An accrued liability is a liability where you do NOT have an invoice but the goods or services were received prior to year-end • The accrual may often be an estimate but accruals should be as accurate as possible • Procedures to follow to ensure all accruals are recorded: ƒ If you issue PO’s. You received them on January 10th with the bill. You had someone come in to fix your photocopier on December 20th. The goods were on back order. Do I accrue this bill if my year-end is December 31? 2. You did not receive the bill till January 15th. You would need to accrue the payroll expense for December 17 – 31 by DR payroll expense and CR accounts payable/accruals.Accounts Payable Any Not-for-profit December 31 Name Jill’s Printing Jack’s Maintenance Total Amount 150 50 200 Total per G/L $200 Accrued Liabilities Any Not-for-profit December 31 Name Gas Payroll Total Amount 50 100 150 Total per G/L $150 Accrued liabilities example: (assume December 31 year end) Payroll – employees get paid every two weeks. Or you could prorate the bill over the number of days in the fiscal year (16/31X100 = $51. 29 . Gas – you receive a $100 gas bill in January that is for the period December 15Jan 15.61). They worked December 17 to 31 and were paid on January 7th. To accrue a half of a month’s gas bill you could just divide the bill by 2. you will need to make the following entry to record the current portion of the loan repayable: DR Long Term Debt 1000 CR Current Portion of Long Term Debt 1000 And you will need to accrue the interest payable on the loan: DR Interest Expense 250 CR Current Portion of Long-Term Debt 250 The Balance Sheet at December 31.000 loan on January 1. At the year end. You received a $5.Loans Current amounts (payable within one year) and long-term amounts (payable for all periods over one year) must be broken out separately. Example The fiscal year end is December 31. to be repaid annually over five years with an interest rate of 5%. would show: Current portion of Long-Term Debt $1250 Long-term Debt $4000 30 . At the year end you would need to ensure any amount repayable within a year is reclassified to the current liabilities. individuals. expected life. Capital Assets If you are not recording capital assets you need to disclose certain information about the capital assets in the notes to the financial statements. Disclosure may be in general categories. etc. There is significant leeway allowed in this regard. Related Party Transactions Transactions that involve members of the board or family members or companies related to members on the board need to be disclosed in the statements or notes. Contributions by Major Source Contributions by major source need to be detailed in the statements or notes.cassfraser.). An accountant preparing your financial statements for free. You should keep track of these transactions as they occur. books for a library) or a service (eg. Computer. and the method of valuing these transactions. (description. 31 . Ideally the accounting coding will facilitate this disclosure if there are significant contributions to track. Contributions of Materials and Services When someone donates an item (eg. a carpenter volunteering to renovate old office space into a classroom) your policy may be to record the value of the items/services donated. except for reimbursements.ca for a more comprehensive listing of the disclosure requirements by financial statement category The Details of External Restrictions and Inter-Fund transfers The nature and amount of any external restrictions of net assets and contributions needs to disclosed in the year end statements. for example: Government of Alberta. Normally capital asset purchases and sales are recorded on a schedule detailing the additions. including investment sales and purchases needs to be disclosed in the statement of cash flows at the year end. age. Please see www. disposals and amortization of capital assets. as it may be difficult to gather this information after the fact. Cash Flows The details of investing and financing activities. and corporations. or it may identify large donors. Below we have listed the significant disclosures that you may want to keep in mind during the year.Disclosures to keep in mind throughout the year There are a number of disclosures required by generally accepted accounting principles. amount expensed during the period. Also the details of inter-fund transfers need to be disclosed. or if you are a registered charity If you are eligible you can receive 50% of the GST paid on eligible expenses. especially hospitals.7. and some quasi-government organizations. See the list of exempt activities on page 35: If you are not exempt. Accounting for the GST - - We will just cover the basics of the GST here .Also there are a number of reporting options that can be used including “simplified” calculations allowed .000 in four quarters. So what is a taxable supply? It is basically revenue that is received for goods and services. which include general operating expenses and so on.000 a year. you must register. .The GST can be quite specific for some organizations. The Excise Tax Act defines what is exempt. The key here is that you cannot claim the credit on expenses paid for taxable supplies.Am I eligible for the Public Service Bodies Rebate? Do I have to register for the GST? You have to register if taxable supplies exceed $50. it’s almost as easy to just call CRA and ask them. for most NPOs the two things that need to be considered are: . There is a generous formula for charities.You are best to first consult CRA’s guides RC 4081 GST/HST information for Non-Profit Organizations and RC 4082 GST/HST information for Charities for more detailed discussion However. They have rules you would not imagine. a one year period. 32 . Two good rules of thumb are: • It won’t be exempt if the service or sale is likely to be offered by a commercial profit orientated enterprise • The government makes special rules to be nice to NPOs and Charities If you’ve got a suspicion something may be exempt. or previous two fiscal years. was from government. Charities can be exempted if gross revenues are less than $250. Am I eligible for the Public Service Bodies Rebate? You are eligible for the Public Service Bodies Rebate if 40% of revenue in the fiscal year. unless that revenue is exempt. collect the tax and you can claim any GST paid on the expenses associated with providing the taxable supplies.Do I have to register for the GST? And . We won’t discuss those special circumstances. if you are registered .if you are claiming the public service bodies rebate 33 .Typical Journal Entries for the GST . 000 and gross revenues exceed $250.you may register if input tax credits on commercial activities are desired Public Service Bodies Rebate – 50% . and .000 .if taxable sales are > $50.The GST Register for the GST? . or previous two years 34 .organizations with at least 40% government revenues in the year.charities only need to register if taxable sales exceed $50.available for all charities.000 in four consecutive quarters . bingo cards. prescription drugs. and 90% of the assistants are volunteers lottery. Wedding receptions) total admission to fundraising events most goods and services sold and provided in fundraising activities (unless the activity is regular or continual for a significant part of the year. Examples of "zero-rated" supplies are basic groceries. but not for example advertising in a newsletter library cards of public libraries Some Exemptions for Charities all of the above. and casino bets (except the sale of provincial tickets) goods sold at an amount less than or equal to the direct cost certain memberships. raffle tickets. and: most services sales of used and donated goods short-term residential accommodation meals-on-wheels programs parking space rentals short-term facility rentals catering services for private functions (eg. grants and subsidies most sponsorships.Some Exempt Taxable Supplies Some Exemptions for Non-Profit Organizations admission to a place of amusement where the maximum price is less than $1 admission to athletic events or performances where 90% of the performers or athletes are neither directly or indirectly paid. suffering or distress donations. government grants and expense reimbursements are not considered pay goods and services provided for free (blood and blood derivates are zerorated) the sale of goods in fundraising where: 1-the organization is not in the business of selling the goods 2-the salespeople are volunteers 3-each item costs $5 or less 4-the goods are not sold at an event in competition with those in the business of selling those goods admission to gambling events that are not conducted in a commercial hall. and certain medical devices. An organization is entitled to the full input tax credits for the GST paid 35 . Some taxable supplies are "zero-rated." and the tax charged is 0%. except where there is substantial overnight supervision recreational services for underprivileged persons food. see the CCRA guide recreational fees for children 14 and under. beverages and short-term accommodation to relieve poverty. see the CCRA guide most sales and leases of real property. for example the use of logos etc. 36 .on purchases relating to the provision of these "zero-rated" taxable supplies. payroll remittances . Accounting for Payroll The payroll rules . using the tables .the ROE - record the employer’s liability 37 .completing the T4 .8.contractor vs employee .taxable vs non-taxable benefits .the TD1 .deductions to be made in the year. to ensure sufficient attention is given to financial matters and to fiduciary responsibilities of a financial nature.effective control starts with management’s attitude to controls .does the Board understanding the risks relating to fraud and error.The Board should review financial results including budget versus actual results 38 .A finance and audit committee should be considered.this begins at the Board level .9. and the controls that mitigate those risks? . Internal Controls Control Environment .The CICA’s audit standards suggest that the Board should understand management’s process for identifying and responding to the risks of fraud and error . this also allows the Board to focus its efforts more efficiently . Control Systems and Procedures The Key Financial Controls of any system include: • • • segregation of duties reconciliations within and outside the accounting system approval of transactions • a review of transactions and financial results, including budgets • a review supporting schedules, and other supporting documentation for transactions • policies with respect to the treatment of transactions 39 Control Systems Donation Example $ Mail Person A & B Person C open mail and record donations on a “blotter” prepares bank deposit and deposits cash Person D ensures the total bank deposit agrees to the listing Expense example Person A Person B Person C Approves expense and account coding Enters transactions to general ledger Signs the cheque after reviewing invoice Reviews coding in FS 40 Revenue and Receipt Controls The basic objectives are to ensure: - revenues are completely and accurately recorded - receipts are safeguarded - restrictions are complied with We’ve included on page 44, some common and useful revenue controls you may wish to consider. We’ve focussed on donation controls. Donations can be the most difficult to obtain assurance over, especially where there are a lot of minor cash donations. Often audit opinions are qualified with respect to cash donations. 41 Develop procedures to detect and account for restrictions on contributions: . so they can be accessed and reference from accounting records. 42 .Develop policies to determine the fair value of donated assets and record them in the organization’s records. Develop specific policies regarding the recording of donated materials and services and estimating their fair value.Keep letters etc on file. and • all payables are recorded at the period end .Pay from invoice only.Invoices should be marked as paid to prevent duplicate payments . and not the statement .Supporting documentation should accompany cheques presented for signature .Expense and Expenditure Controls The basic objectives are to ensure: • a record of all disbursements is made • authorized persons approve the disbursements.Procedures should be in place to ensure all invoices pertaining to the fiscal year are accrued 43 .Only authorized persons should have access to blank cheques .Cheques should be signed by two persons .Someone should review and approve the invoice account distribution and approve the invoice for payment .Cheque signers should be authorized by the board of directors .Cheques should not be signed in advance or made out to cash .Bank reconciliations should be prepared and reviewed . Door-to-door solicitation or collection by two-person teams . and to the person in charge of bookkeeping . Use pre-numbered and preprinted ticket booklets with detachable stubs 3.Preparation of a list of the amounts received. which are sealed on the spot when the donation is received. segregate of incompatible tasks: for example canvassing. and sales revenues . bank deposits Donations received through the mail . signed by preparer . Ticket sales 1. Control the distribution and sale of tickets or tokens - Segregate where possible the record-keeping from the accounting function.Forward a copy of the list to the person preparing the deposit slip.attempt reconcile these revenues independently of the accounting system . reconcile to items sold and cost of sales ii. It is therefore necessary to have strong controls to ensure these amounts are completely recorded.Mail opened by two people . In all cases. bank deposits Donations received through door-to-door or direct solicitations . Inventories.Immediate endorsement of cheques for deposit only . receipt of revenues within the organization.Use of pre-numbered envelopes to collect donations.Segregation of incompatible tasks: opening mail. membership fees. Reconcile sales with expected revenues 2.Examples i. where possible.Typical Controls required in an NPO Environment Membership Fees and Sales Membership fees. those responsible for making deposits etc Donations Donations can be the highest risk as these amounts cannot be reconciled to revenue generating activities. bookkeeping. bookkeeping. reconcile to membership database iii. the envelopes may then be forwarded to the organization with a list of donations received 44 . Donated property. cost or fair value at dates of contribution.Attendance and time records should be used. periodically review restrictions in place .Create procedures to ensure that restrictions are respected: record of restrictions.Variances between actual and budgeted payroll should be investigated Capital Assets . date purchased or received by contribution.Separate recording of restricted donations.Develop specific policies to record donated materials and services and to estimate their fair value . determine a cutoff amount below which items are expensed. a physical inventory of property and equipment should be made reconciliations prepared and reviewed and any discrepancies followed up 45 . records of donated materials) Detection and recording of restrictions of donations . so they can be accessed and reference from accounting records .Policies should distinguish between capital items and a repairs and maintenance expenses. the detail of this will depend on the policies of the organization.Implementation of procedures for the registration and compilation of donated materials and services (signed and approved time sheets. and the method for determining the fair value of contributed capital assets .Develop procedures to detect restrictions: review of documents supporting donations. contributor or funding source restrictions on use or disposition.Develop policies to determine the fair value of the property and record it in the organization’s records Donated materials and services .Time should be approved by a person knowledgeable of the actual time worked .At least annually. staff arrangements etc .Detailed capital asset records should include the description. establish amortization basis. this becomes important for tracking vacations etc. communicate restrictions to those in charge of budgeting etc. etc . contributions or grants Payroll . contributions or grants o Keep letters etc on file. plant and equipment . as compliance questions have now been dropped from the return.Can use the T2 short and GIFI short for this purpose. however there is no penalty unless there is tax owing . or can be fined $25 per day. a receipt can be issued . The T3010 . the T2 Short is only 2 pages long Not for Profit Information return . You can download this from the web if you like. The rules are nicely summarized in RC4108.000 at the end of the previous fiscal period .Also there are new more generous rules on split receipting that you may want to be aware of: eg where a person pays for a golf tournament where a portion of the fee is actually a donation.000 .have within six months of year-end to file. . the disbursement quota and so on. regardless of whether there is taxable income .Must be filed if .10. Reporting to CRA and the Alberta Government T2 Corporate Tax return and the GIFI return . rentals.Filling out the T3010 46 .or.total assets were more than $200. CRA has been fining some organizations for being late. or royalties is more than $10. See also CRA receipt samples.The new T3010 is only 4 pages instead of 12: good news . a guide put out by CRA. except registered charities.has to be filed within six months.every organization incorporated in Canada. had to filed last year: continues forever . must file this. which discusses all the rules for receipts.A regime of fines is in place for late filing etc .revenues from taxable dividends.You may want to consult CRA’s rules charitable donations to ensure you remain in compliance. interest. You have to file the return within six months after the end of the corporation’s taxation year. . . or state 025 Incorporation? (item 19) . Parts. . . financial statements. . or GIFI . . . a board of trade or a chamber of commerce. . .. Amalgamation? (item 20) . . see the corresponding items in the 2001 T2 Corporation Income Tax Guide. R 001 003 1 Yes C If yes. If you need more information about items on the return. . . society or association 2 Refunded. . . . including schedules. . . you have to file a separate provincial corporate return. . . . . . An agricultural organization. 065 016 Country (other than Canada) 1 Yes 018 YYYY Mailing address (if different from head office address) (item 14) Has the address changed since the last time we were notified? 020 1 Yes 2 No Is the corporation a professional corporation that is a member of a partnership? (item 18) . territory. . . . See items 1 to 5 in the guide for more information on when and how to file T2 returns. . and the General Index of Financial Information (GIFI) to your tax services office or to the tax centre that serves the corporation. . . . . . . . . . . . . . subsections. . . . . . . ... . . . . . . including proposed legislation. . If yes. . . . . or state Has there been an acquisition of control to which subsection 249(4) applies since the previous taxation year? . . . . . . provide the date control was acquired . 067 c/o MM DD 2 No MM 1 Yes 2 No 070 1 Yes 2 No 071 1 Yes 2 No DD Is this the first year of filing after: 022 023 City Province. . . 2 No 010 1 Yes Taxation year start 2 No City MM DD YYYY Province.. . . . . . . . . please provide Schedule 24 026 Postal code/ZIP code Country (other than Canada) 027 028 Location of books and records (item 15) 031 Province. 076 1 Yes 2 No Is this the final return up to dissolution? (item 23) . . . .Canada Customs and Revenue Agency Agence des douanes et du revenu du Canada 200 T2 SHORT RETURN (2001 and later taxation years) S Code 0101 055 Do not use this area This form serves as a federal and provincial or territorial corporation income tax return. 750 840 085 If the corporation is exempt from tax under section 149 tick one of Tax instalments paid (item 158) . territory. . . . . . . . . . or Alberta. territory. . . or 2 Certain farmers’ and fishermen’s insurers 4 Exempt under other paragraphs of section 149 (please specify) 3 Applied to another liability. unless the corporation is located in Quebec. . . .) Page 1 of 2 . . 078 1 Yes 2 No If yes. 300 ( ) Provincial or territorial jurisdiction (item 131) . . . . . If the corporation is located in one of these provinces. . . . . . . . . . . . . . 1 Non-profit corporations for scientific research and experimental development 3 Transferred to next year’s account. or state City 035 036 Postal code/ZIP code Country (other than Canada) 037 038 040 Type of corporation at the end of the taxation year (item 16) Canadian-controlled 5 private corporation (CCPC) Has there been a wind-up of a subsidiary under section 88 during the current taxation year? (item 21) . 063 Postal code/ZIP code If yes. . . . . . . . . . . the following boxes: (item 25) 894 If there are excess payments in this year’s instalment account. . . . . . . . . (attach instructions) Do not use this area 091 092 093 094 095 096 097 T2 Short E (02) (Ce formulaire existe en français. or.. . . . . . . please provide Schedule 24 032 1 061 YYYY 012 021 2 No Taxation year-end 060 017 1 Yes To which taxation year does this return apply? (item 17) 011 015 004 Other corporation (please specify. . 072 1 Yes 2 No Is this the final taxation year before amalgamation? (item 22) . . . Corporation’s name (item 12) 002 Has the corporation changed its name since the last time we were notified? . . . sections. . Identification Business Number (BN) (item 11) . Address of head office (item 13) Has the address changed since the last time we were notified? . . . . . . . do you have a copy of the articles of amendment? . . . . . . . please indicate whether they should be: (item 159) 1 a non-profit club. below) "Nil" or "net loss" for income tax purposes from Schedule 1. . and paragraphs mentioned on this return refer to the Income Tax Act. . Ontario. . . Send one completed copy of this return. This return may contain changes that had not yet become law at the time of printing. . . . . . . . . . . . . . . 1599 ( Long term Capital Land . . . . . 3300 Accumulated amortization of buildings . . . . . . . 1480 Total current liabilities . . . 2071 Total intangible capital assets . . . . . . . . 2360 Other long term assets . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3450. . . . .) Page 1 . . . . . . . . . . . . . . . 2600 Accounts receivable . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2180 Other items affecting retained earnings . . 3470 Furniture and fixtures . . . . . .. . . . . . . . . . . . . . . . . 3849 Long term investments .. . . . . . . . . . . . . . . . .. 1787 3499 Accumulated amortization of furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 2008. .. . . . . . . . . . . . . . . . . . . . 2620 Allowance for doubtful accounts . . . . . . . . . . . . . . . .. . . . 3260 Buildings . . . . 2589. . . . . . . . . 2960 Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2589 Assets held in trust . . . . . . . . . . . . . . 2240 **Retained earnings (deficit) – end . . . . . 2009. 3220 Depletable assets . . . . . . . . . . . . . . . . . . . . . and 2590) T1178 E (01) (Ce formulaire existe en français. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3640 ) ( ) ( ) ( ) Retained earnings (deficit) – start . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . . . . . .. . . . . . . . . . . . . . . . . . ( ( Preferred shares . . . . . . . . . . . . . . 2070 Accumulated amortization of resource rights . . . . . . . 2590 *Total assets . . . . . and 3470) 1788 Other tangible capital assets. . . . . . . Investment in joint venture(s)/partnership(s) . . . . . . . . 1060 Amounts payable and accrued liabilites . . . . . . . . 2420 Total long term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1740 Total long term liabilities.. . .. . 3600 *Total shareholder equity . . . . . 3540 Retained earnings (deficit) . . . . . . . . . . . . . 1621 ( ) Due to shareholder(s)/director(s). . . . . . . . . . . . . .. . . . . . . . . . .. . 3520 ) Contributed and other surplus . . . . 1300 Current portion of long term liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1061 ) Amounts payable to members of NPOs . . . . . . ( Due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 1741 ) Amounts held in trust . . . . . . .. . . . . . . . . . . Long term debt . . . 2920 Due from / investment in related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (add 1599. 2680 Inventories . . . . . . .. . . . . 2008 Total accumulated amortization of tangible capital assets . . . . . . . . . . . . . . . . . . . . 3700 Statement of Retained earnings (deficit) Net income/loss Long term Due from shareholder(s)/director(s) . . . . . . . . . . .. . . . 1073 Taxes payable. . . . . . . . . . . . . . 2179 ( ( ) 3320 Shareholder equity 3500 Common shares . . . 3740 2200 Interfund transfer .. . . . . . .. . . . . . . 2599 ( ) * Required line items must be completed. . . . . . . . . . . . . . 3139 Total current assets . . 2011 Resource rights . . . 1900 Accumulated amortization of other tangible capital assets . . . . . . . . 2178 Total accumulated amortization of intangible capital assets . . . . 1680 1681 Machinery and equipment . . . . (Add 3139. . . . . . 2178. . . . . . . . . . . . . . . . . . . . . . . . 2630 Amounts receivable from members of NPOs . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . 3240 Accumulated amortization of depletable assets . 1120 Short term debt . . . 3660 . . . . . . . . . . . . . . . . . . .. . . . . . 1400 Other current liabilities. . . 2780 Loans and notes receivable . 2860 Due from shareholder(s) / director(s) . . . . 1620 Deferred income taxes . . . . . . . . . . . 1901 Total tangible capital assets . ** Required if any of line items 3660 to 3745 completed. . . . . . . . . . . . . . 2009 Intangible assets . . . . . 3140 1600 Deferred income . . . . . . . 3450 Accumulated amortization of machinery and equipment . . *Total liabilities . . . . . . 1000 Bank overdraft . . . . . . . 2010 Accumulated amortization of intangible assets . . . . . . . . . . . . ) Other long term liabilities . . . . . 3745 Due from/investment in related parties . . . . . . . . 2179. . . . . . . . . . . . 2700 Short term investments . . . . . 1240 Due to related parties . . . . . . . . . . . 1180 Due to shareholder(s)/director(s). . . . . . . . . . . .Canada Customs and Revenue Agency Agence des douanes et du revenu du Canada GENERAL INDEX OF FINANCIAL INFORMATION – SHORT Name of corporation Form identifier 100/101 Taxation year-end Business Number Year Month Day Balance Sheet information Assets Liabilities Current Current Cash and deposits . . . . . 2300 Long term loans . . . . . . . . . . . . . . . . . . . 3680 Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3620 Total liabilities and shareholder equity (Add 3499 and 3620) . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . rentals. . . . . . . . . . . . . . . . . . . . . . provincial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and assessments received . . . . . . and royalties received . . . . . . . . . . . . . . . . . . . . . 107 101 104 Section C – Statement of assets and liabilities at the end of the fiscal period Assets Method used to record assets Cash and short-term investments . . . . . . . . . . . . . . . . . . . 100 Interest. . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . or municipal grants and payments received . . . . . . . . . . Federal. . . . . . . . . . . . . . .) 2 No . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . To determine if your organization has to complete this return. . . . . . . . . . . 105 Other receipts (please specify) 106 Total receipts (add lines 100 to 106) . . . . . . . . . . . . . 116 112 115 Liabilities Amounts owing to members . . . . . . . . . . . Amounts receivable from members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Yes please attach an explanation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 T1044 E (02) 118 (Ce formulaire existe en français. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed assets . Amounts owing to all others (please specify) 117 Total liabilities (add lines 117 and 118) . . . . . . . . . . . . . . . . . . . . . . . . 102 103 Gifts . . . . . . . . . . boards of trade. . . . . . . . or if the organization had to file the NPO return for a preceding fiscal period. . . . . . . . . . . . . . . . . . . . . . . . taxable dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . These organizations may have to file this return if they received or were entitled to receive gross investment revenue greater than a certain amount or assets which are more than a certain amount. . . . . . . . . . . . Gross sales and revenues from organizational activities . . Proceeds of disposition of capital property . . . . . . . . . . . . . . fees. . . . . . . . 110 111 Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventory . . . . . . . . . . . . . if any to Name of organization Trust (T3) number. . . . if any Mailing address Is this the final return to be filed by this organization? If yes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . City Type of organization (see the related guide) Province T Postal code Section B – Amounts received during the fiscal period Amounts received Membership dues. . . . . . . . . . . . . . . . . . . . . . Section A – Identification Fiscal period Year Month From Day Year Month Day Business Number (BN). and l organizations described in paragraph 149(1)(e) of the Act (agricultural organizations. . . . . . . . . . . . . . . . . . . . . . 108 109 Amounts receivable from all others (not included on line 109) . . please see the guide called Income Tax Guide to the Non-Profit Organization (NPO) Information Return. . . . . . . or chambers of commerce). . .Canada Customs and Revenue Agency Agence des douanes et du revenu du Canada Do not use this area NON-PROFIT ORGANIZATION (NPO) INFORMATION RETURN This return is for: l non-profit organizations (NPOs) described in paragraph149(1)(l) of the Income Tax Act. . . . . Other assets (please specify) 113 114 Total assets (add lines 108 to 115) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or consolidated with another organization? (If yes. . . . . . . . If no label. Do not include a description of fundraising activities in this section. . . . . . . . it had no governing documents establishing its independent existence)? If yes. . . . Please attach a bar code label here before you mail this return. . . z The Privacy Act protects personal information given on this form. Give detailed information so a reader can clearly understand what the charity actually did to fulfill its mandate. or metropolitan area 2010 Provincially or territorially (Ce formulaire existe en français. . . . . . . . . . . articles of incorporation. . enter: 1. . . The Confidential information section is for the CCRA's use only and remains confidential. . . . . . . . . . see the guide. Please number each program. . which is kept in a personal information bank. Have you attached the list required above? . what is the name and BN/registration number of the other charity? . . . . . position in the charity. . 2000 T3010A E (05) A single rural. . . . .. . . . . . . . . . . . . . . . . . . if a question does not apply to your charity. . . .Canada Customs and Revenue Agency Agence des douanes et du revenu du Canada REGISTERED CHARITY INFORMATION RETURN Section A – Identification z To complete this form. . . . what is the name of this organization and its BN/registration number (if applicable)? . 1800 Yes No C2 Describe how the charity carried out its charitable purposes during the fiscal period. telephone number. Fiscal Period Ending Year Month Day 2. Describe the charity's ongoing programs and new programs in the spaces provided below. .) Ongoing programs New programs C3 For programs carried on in Canada. BN/registration number A1 Has the charity made any changes to its governing documents during the fiscal period (e. . T4033A. letters patent. . . . . (See the guide for instructions on how to describe your programs. province or territory. . merged. . . . constitution. . . . . city. dissolved. . . if they are at arm's length from all other members of the governing board and their date of birth. . . . . or international organization? If yes. . you will need the guide called Completing the Registered Charity Information Return. . . . . . . see the guide. . . . . . . . first name. . city. Grant-making charities should describe the types of organizations they support. . Only the Public information section on the worksheet is available to the public. . . .) . and attach it to this return. . .) . . please explain why in the "Ongoing programs" space below. 1510 Name BN/registration number (##### ####RR####) A3 Was the charity linked in a subordinate way to a provincial. 1580 Yes Yes No No Section B – Directors/Trustees and Like Officials B1 You must attach a list with the last name. . . . . . or terminated operations? (If yes. . . . home address (including street number. . . . . . . . . . and initial of each director/trustee and like official. 1500 Yes No Yes No A2 Was the charity an internal division regulated by the governing documents of another charity (i.). . . . . . national. . . 1540 Name Yes No BN/registration number (##### ####RR####) A4 Has the charity wound-up. . check the appropriate box to show where the programs were carried on. . . .e. . . or by-laws)? (If yes. . . .) 2020 In more than one province or territory . 1700 Yes No Section C – Programs and General Information C1 Was the charity inactive during the fiscal period? If yes. . Do not attach additional sheets of paper or annual reports. . . whether or not they were a director/trustee at the end of the fiscal period. . Use the worksheet included in the guide or a sheet with the same information in the same format to enter this information. . . . . . . . .. street name. . . . . please leave it blank.g. and postal code). . . . z Except for yes/no questions. . See the guide for an explanation of the term arm's length. . . trust. . . 1570 A5 Has the charity amalgamated. see the guide. . . . . . . . . . . . . . . . . . . . the amount. . . . . . . . .. . . . . . . . . . 2400 C8 If the charity carried on fundraising activities. . commissions. List the qualified donees in the order of the total amount of the gifts made. or otherwise receive regular revenue from goods. . . .000 and over D3 On average. . . .C4 Did the charity carry on programs. . . outside of Canada. . . . . . . . 2500 Advertisements/posters/flyers/radio or TV commercials 2560 Fundraising dinners/galas/concerts 2620 Telephone solicitations 2510 Auctions 2570 Fundraising sales (e. . . . . . . . . . . .999 3710 $40. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 3900 . . . . . . . . .999 3720 $80. . . . . . . . . . .g. . 2710 Yes No Yes No staff or volunteers? . C6 Did the charity issue scholarships. . . . . . .. list the countries or regions where programs were carried on. . and whether or not it is an associated charity. . services. . . . . . . . . . . compensated positions did the charity have in the fiscal period? . . . . . . . . or honoraria to an individual during the fiscal period? . . . . finder's fees. . . . . . . . . . . . . .00 Yes No Yes No D6 Except for compensation. . . . . . . . .g. 2300 Yes No Yes No C7 A charity may pursue political activities that are non-partisan. . . . . . . . . . . . . . . . . . during the fiscal period? . . . .000 – $119. . . . . . . the total amount of the gift for the fiscal period. . . . . . or the use of the charity's assets? . . . . . . . . . . . . . . . . . .. . check all the types of gifts that apply. . . . . . contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2100 If yes. . . . . . . . . . . . . . . . . of specified gifts. . . . if any. . . . . . 3600 D2 For the five highest compensated positions indicate the number of positions in each of the following annual compensation categories. . . . . . . . . . . . . . 2900 Yes No If yes.) 2650 Other 2660 Specify: C9 Did the charity use incentive-based compensation (e.) . . full-time. . . . . . BN/registration number. .g. . . . . . . . . and honoraria) and benefits (e. . . . . . . . 2720 Yes No C10 Did the charity charge fees for. how many part-time or part-year employees did the charity employ in the fiscal period? . . . . . . . . . . . . . . . . . . . . . . .999 3730 $120. . . . . . . . . . . . . . . . or similar arrangements? . . . . . . . . . . . . . . . bursaries. . . . . . . . C12 If the charity received non-cash gifts (gifts in kind) for which it issued tax receipts. . . check all fundraising methods that it used during the fiscal period. . . . . . . . honoraria) for fundraisers? . . . . . . . . fees. . . . . . . . . . . . . . . . . . . . . . 3850 $ D5 Did the charity compensate any of its directors/trustees or like officials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . salaries. . . . . . . . . . . . . . . were these incentives paid to: z contracted fundraisers? . . . . . . . . . . . . . awards. . . . . . . . . . . Do not include countries or regions where programs were managed by a qualified donee. . . . . . . . . . . . Include only those positions that are permanent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . directly or indirectly. . . . . . . . . . . . full-time positions. . . . . . . . . . . . .000 – $79. . . transfer any part of its income or assets to individuals or organizations not at arm's length to the charity? . 3700 $1 – $39. . . prizes. . bonuses. . . . . you must attach a list with the name of each qualified donee and its location. . outside Canada? . 3950 .g. . . 2140 Yes No Yes No Yes No Yes Yes No No C5 For programs the charity managed directly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3800 D4 What was the total expenditure on compensation for part-time or part-year employees in the fiscal period? . . personal use of a car or office space). . related to its charitable purposes. . . . . . . . chocolate) 2630 Tournaments/sporting events 2520 Bingo/casino nights Collection plates/boxes Mail campaigns Planned-giving programs 2640 2530 2580 2590 2540 Door-to-door solicitation 2600 Targeted corporate donations/sponsorships 2550 Draws/lotteries 2610 Targeted contacts Walk-a-thons/bike-a-thons (etc. . . joint-venture. . . . . . . . . . . . . how many permanent. . . . . . . . . . . . . . . . . . . . . . . . . . . starting with the largest. . . . . . . . . . directly or indirectly. . . . . . did the charity carry out political activities or provide assistance to another organization to carry out political activities? (See the guide for information on political activities. . . . . . . . . . . . 2130 by other means? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cookies. . . . . . . . . . . . 2110 z z z under agency agreement. . . . . . . and limited in extent. . . . . . . . . . . . . . . . . . . . . . were any carried out: z by employees or volunteers of the charity? . . . . . . . . . . . . . . . D1 On average. . . . . . . . . . . . . . did the charity. . . . . . . . . . . . 2700 If yes. . 3000 Artwork/wine/jewellery 3040 Cultural property 3080 Publicly-traded securities/mutual funds 3010 Building materials 3050 Ecological property 3090 Privately-held securities 3020 Clothing/furniture/food Vehicles Machinery/equipment (including computers/software) Hedge funds/life insurance policies 3100 3030 3060 3070 Other 3110 Specify: Section D – Compensation Note: Compensation includes all forms of remuneration (e. During the fiscal period. . . . . Use the worksheet included in the guide or a sheet with the same information in the same format and attach it to this return. . . . . 2800 Yes No z C11 Did the charity make gifts to qualified donees? . . 2120 through gifts to qualified donees? . . . 4350 . .00 Amounts receivable from non-arm's length parties 4110 Amounts receivable from all others . . .00 . . . . . . . Assets Cash. . . . . bank accounts. . . .Section E – Financial Information E1 E2 Please show figures to the nearest single dollar. Do not show cents. . . . . . . . 4310 . . . . . . . . . . . 4300 Deferred revenue . . and short-term investments . See the guide for an explanation of the terms. . . . . . . . . . . . . . .00 . . . .00 . . . . 4120 Investments in non-arm's length parties . . . 4130 .00 Other liabilities . . .00 Liabilities Accounts payable and accrued liabilities .00 4100 .00 Amounts owing to non-arm's length parties 4320 . . 4330 Total liabilities (add lines 4300 to 4330) . . . . . . .00 . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . to its disbursement quota. . . . . . . . . . . . . . . . . .. . . . . . . . .00 b. . . . . . .. .) Yes Yes No No F10 Indicate the average value of property not used for charitable activities or administration during: z the 24 months before the beginning of the fiscal period . . . . . . . . . . . . . . . . . . . . . . . .00 5510 . . . . . . . . . .. . . . . . It is a serious offence under the Income Tax Act to provide false or deceptive information. . . .. . . . . . . . . .. did the foundation acquire control of a share-capital or for-profit corporation? . . . . . . . if any.. . . no. . . . . . . . (See the guide. F2 If the charity retained contracted fundraiser(s). . . . . . . . . G1 In the fiscal period.. . . . . . . . . . including income earned for the fiscal period on previously accumulated funds . .. . in purchasing or Section H – Certification H1 To be completed by a director/trustee or like official of the charity.) . . . . ... . .O. . . . . R. . . . . . . . . . . . . . . . . . the amount disbursed for the fiscal period for the specified purpose we have granted permission for . . the net fundraising revenue received by the charity (line 5450 minus line 5460) . . . . . rights to acquire such 6100 Yes No shares. .. . . . ... . . . . no. . . . . . . . . . . . .. . . . . . . . .R. . .. . . . . . . . . and current. . .) .. . .. .. .. . . . . . . 5520 $ . City Postal code: Province or territory and postal code I2 Location of the charity's books and records Number. . . . . . . . enter the special reduction amount for the fiscal period. 6000 Yes No selling investments. . . . enter: 5400 $ . . . . . . .. . . . . . . . City Province or territory and postal code Phone number ( Printed in Canada ) Fax number ( Postal code: ) . . . street. . . . . I certify that the information given on this form.00 . . .. . apt. . .. . . . . . . . . and any attachments is. . . c. . . . 5750 $ . . . . . . . . . . ... . the gross revenues collected by the fundraiser(s) on behalf of the charity . . . . . . . . of enduring property spent in the fiscal period. . . . 5900 z the 24 months before the end of the fiscal period . . . . . to the best of my knowledge. . . . . . 5740 $ . . no. . Name (please print) Position in charity Signature Date signed Section I – Confidential Data I1 Physical location (address) of the charity (Do not use rural route or post office box numbers. . . . . . . . . ... . . . . .00 F4 Of the tax-receipted gifts received by the charity for the fiscal period.. . . . . . . . . . . . . . . . . . . . . . .. . . . . .) . . . . .. . . . . . . . . . . . . . . . ..00 $ $ z the total eligible amount of tax-receipted enduring property . . 5610 .. . street. . the basic information sheet. 5500 $ $ the amount deemed to be a tax-receipted gift for the fiscal period . . . .00 F3 If the charity has written permission to accumulate property.. box no.. . . .. . .. . . . .. . . . . . . . . . . . . . or lot and concession no. . . . . . . 6150 Yes No G2 Did the foundation incur debts at any time during the fiscal period other than for current operating expenses. .. . G3 For private foundations only: At any time during the fiscal period. . .. . . . . . . .. 5710 $ z F6 Enter the capital gains from the disposition of enduring property in the fiscal period. . . . . . . . .. . . . . .. . . . . or lot and concession no. . . . . .. . . . . . . . apt. . . 5600 . . . .00 $ . . . . . . . . . . . . . . .00 Section G – For Foundations Only Note: See the guide for an explanation of the terms and requirements of this section. . . . . . . 5720 F7 Is the charity claiming an amount that is less than the maximum capital gains reduction? (See the guide. . or in administering charitable programs? . . . . . . . . . . did the foundation hold any shares. . . City Postal code: Province or territory and postal code I3 Name and address of the person who completed this return Name Firm name (if applicable) Number. . . . 5450 5460 5470 $ $ $ . . . . . . . . . . . . . . . . . . enter: z z z the amount accumulated for the fiscal period. . street. . . . . . . ... . .. .) Number. . . . . . . . . . . . . . . . . . . . .00 . . . . . . . . . . . . . . . . . . . . . . . .. . . . . complete. . . ..00 . . . . . . .00 F9 Did the charity acquire a non-qualifying security or allow a donor to use any of the charity's property under the circumstances described in the guide during the fiscal period? . . . . . . .. . 5910 $ $ . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . . apt. . . . . . . . . . . 5730 . . enter: z the total eligible amount of tax-receipted non-cash gifts (gifts in kind) . . .00 . the amounts paid to and/or retained by the fundraiser(s) . . . . .. . no. . .00 a. . . . . . .. . . . . (See the guide. . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . (See the guide. enter the amount from line 11 of form T1259.. . . . . . . . . . . . .00 . . . . .Section F – Other Required Information F1 What were the total expenditures on programs outside Canada during the fiscal period. . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . .. . .00 the total eligible amount of tax-receipted tuition fees . . . . . . . . . . . . . . . . . . . . correct.. . 5640 $ F5 Enter the amount. . . . . . . . .. . . . . . or P. excluding gifts to qualified donees? . . .. . . .00 F8 If the charity is taking a special reduction. . . . . . . . . . . . . . . . which we have approved. . . .. . . . . . . . . . or debts owing to it that meet the definition of a non-qualified investment? . . . . . .. . . . . 5800 If yes. For example.cra.. Different receipts correspond to different circumstances. Therefore. meal. they are only a guide and your receipts do not have to appear exactly as presented but must contain all the relevant information. initial.ca/charities Sample 2 Cash gift with advantage The items in this sample receipt should be included on your official donation receipt if the donor or any other person receives something in return for the gift i. Therefore. the donor makes a cash (or cheque) gift of $20. the donor pays $50 to attend a fundraising luncheon where the only consideration received is a meal valued at $20. golf tournament. To make issuing receipts as simple as possible for charities and still meet the necessary requirements. Sample 1 Cash gift (no advantage) This is the most common scenario. the charity is advised to contact the CRA before issuing a receipt. For example. If the amount of the advantage exceeds 80% of the fair market value of the gift. the eligible amount of the gift is $30.Sample – Official Donation Receipts There have been changes to the requirements for official donation receipts. the eligible amount of the gift is $20. book etc. Sample # 1 Cash Gift (no advantage) Official Donation Receipt For Income Tax Purposes Charity name Canadian charity address Date donation received_______________ 0001 Charity BN/ Registration # Donated by ______________________ First name. we have provided sample official donation receipts. The items in this sample receipt should be included on your official donation receipt if the donor or any other person receives nothing in return for the gift. The total amount received by the charity is $50 and the value of the advantage (the meal) is $20. Please note that these receipts contain the information that must be provided according to the Income Tax Act.e. last name Address Eligible amount of gift for tax purposes_________________________ ______________________ ______________________ ______________________ Date receipt issued ________________ Location receipt issued _____________ Authorized signature ______________ For information on all registered charities in Canada under the Income Tax Act please contact: Canada Revenue Agency www.gc. . However. There is no advantage received or receivable by the donor or any other person for the gift. initial.Sample #2 Cash Gift with advantage Official Donation Receipt For Income Tax Purposes Charity name Canadian charity address 0001 Charity BN/ Registration # Date donation received_______________ Donated by ______________________ First name. last name Total amount of cash received by charity_________________________A Address _______________________ _______________________ _______________________ Date receipt issued ________________ Value of advantage __________________________________________B (cash/ fair market value of property or services) Eligible amount of gift for tax purposes_________________________C Location receipt issued _____________ . 000 and the donor receives an advantage of $20. initial.ca/charities Sample 4 Non-cash gift with advantage The items in this sample receipt should be included on your official donation receipt for a non-cash gift if the donor or any other person receives something in return for the gift. . Charity name Name of charity as recorded with the Minister. the charity receives a house valued at $100.000 in cash. 001 Sample serial number of receipt. last name Total amount received by charity___________________________A (fair market value of property) Address Value of advantage______________________________________B (cash/ fair market value of property or services) _______________________ _______________________ _______________________ Date receipt issued _______________ Location receipt issued _____________ Eligible amount of gift for tax purposes____________________C (line A minus line B) Authorized signature _______________ Description of property received by charity___________________ Appraised by____________________________ Address of appraiser______________________ For information on all registered charities in Canada under the Income Tax Act please contact: Canada Revenue Agency www.cra. If the amount of the advantage exceeds 80% of the fair market value of the gift. Therefore.000. Sample #4 Non-cash Gift with advantage Official Donation Receipt For Income Tax Purposes Charity name Canadian charity address 0001 Charity BN/ Registration # Date donation received_______________ Donated by ______________________ First name.ca/charities Official Donation Receipt For Income Tax Purposes Statement that the receipt is official for tax purposes. the eligible amount of the gift is $80.gc. For example. the charity is advised to contact the CRA before issuing a receipt.For information on all registered charities in Canada under the Income Tax Act please contact: Canada Revenue Agency www.cra.gc. . the name and address of the appraiser must be provided. If the property has not been appraised. Description of property A brief description of property received by charity.. (i. expressed in dollars.000. If the amount of the gift is in excess of 5. publicly traded securities or cultural property. the charity is required to obtain specific information from the donor.value of books.000. and who are acting independently of each other. between a willing buyer and a willing seller who are knowledgeable. If the donation is a non-cash gift. If the property has been appraised.e.) Eligible amount of gift for tax purposes This is a new term used in the Income Tax Act to refer to the amount that the donor can claim for tax purposes for the donation. (Exceptions include ecological gifts.) Value of advantage Total amount of all benefits provided to donor or any other person for the gift. there is no legal requirement to have property appraised. inventory. Appraised by Name of appraiser if property is appraised. Fair market value generally means the highest price. use the day on which the donation was received. and prudent. informed. real property situated in Canada. Charity BN/ Registration# The registration number as assigned by the Minister. meals. It is recommended that property be appraised if the value is over $1. the value of which is certified by the Cultural Property Export Review Board. that a property would bring in an open and unrestricted market. Total amount received by charity The fair market value of property received from the donor. Date donation received If the donation is a cash donation. use either the day on which or the year during which the donation was received. However. Please contact the CRA for more information. golf tournaments etc. the charity must be able to substantiate the value of the property.Canadian charity address Canadian address of charity as recorded with the Minister. Location receipt issued Place or location receipt was issued. in the case of an individual. Donated by Name of the donor including.000. If the property has not been appraised. Canada Revenue Agency www. Date receipt issued The day on which the receipt was issued. the donor’s first name and initial. Authorized signature The signature of an individual who has been authorized by the charity to acknowledge donations.ca/charities A listing of all registered charities under the Income Tax Act.Address of appraiser Address of appraiser if property appraised. . However there is no legal requirement to have property appraised.gc. If the property has been appraised. It is recommended that property be appraised if the value is over $1. the name and address of the appraiser must be provided. Address Address of the donor. the charity must be able to substantiate the value of the property.cra. Alberta Government Filings - there are a number of filings that are potential including filings under the Charitable Fund Raising Act. and various reports for Arts organizations etc. - the Casino report - the Society Annual Return 52 . be realistic since some areas of your service may suffer Consider previous results in forming expectations Budget on the same basis as your financial reporting .11. 53 . large one time programs that do not occur annually Budget to ending surplus and not net income . capital expansions. Business Planning and Performance Measures Budgeting Considerations - Budgeting is Good Financial Planning For which of you. Budgeting. and deferred contributions Budgeting should be timely May want to consider a supplemental revision process Consider a 3 to 5 year plan .Once you’ve established the appropriate ending surplus as determined through the long range plan. intending to build a tower. whether he has enough to finish it – Luke 14:28 - - Don’t faith budget.Which would account for the use of a built up surplus/deficit.A supplemental cash flow budget can account for the non-cash items such as capital. does not sit down first and count the cost. Year End 54 . Budgeting to Ending Surplus Unrestricted Net Assets Budget Actual Revenues 80 85 Expenses 100 100 Excess (Deficiency) of Revenues over Expenses -20 -15 0 0 20 20 0 5 Unrestricted Net Assets. beginning of year 15 15 Unrestricted Net Assets end of year 15 20 Investment in Capital Assets Transfer from (to) Internally Restricted Net Assets Net Increase in Unrestricted Net Assets 55 . Use Managerial Accounting Techniques • Zero Based Budgeting vrs Incremental Budgeting • Prioritize Goals and then Resources • Discretionary vrs Non-Discretionary Expenses • Fixed vrs Variable Costs • Consider the Appropriateness of the Cost Structure • Is Overhead too High? • Budgets for Special Projects and Fundraising Campaigns • Analyze Historical Gross Margins • Monitor Actual Results against Expected Results 56 . Planned and Actual Performance This form of planning and reporting may be especially useful as a way of reporting to donors not involved in the operations.Business Plans – Goals and Performance Measures You may want to consider this model of planning and reporting 1) Determine what you consider to be goals of your organization . 57 .no more than 5 or 6 2) Determine your strategies for achieving those goals 3) Determine how you will measure the success in achieving those goals .Planned and Actual Expenditures .Performance Measures 4) Report against the Results . Camrose Church Goals 1) Increase the Quality of Worship 2) Share the Message of Christ 3) Brotherly Love 4) Care for the Lonely 5) Heal the Sick 6) Instruct the Church 58 . 59 .Camrose Church Goal 1 Increase the Quality of Worship Strategies • Encourage the Church to spend more time in prayer for the worship team and the worship. • Find out what other churches do successfully in worship. • Encourage the worship team to pray prior to the service. • Sing songs that express devotion to God. • Find a worship leader with a gift of leading people into worship of God. Target: 80% believe there is an Improved Quality of Worship Output Orientated Measures 1. Survey the congregation with respect to the quality of worship.Camrose Church Goal 1 Increase the Quality of Worship Performance Measures Outcome Orientated Measures: 1. % of Songs that express Personal Devotion to God Target: 2/3 of Songs express Personal Devotion and Commitment to God 2. Length of time the Church spends in worship Target: 30% increase in time spent in worship as a congregation 60 . 61 .Camrose Church Annual Report Page 4 Goal 1 Improve the Quality of Worship Performance Measure Survey Congregation: .Target: 80% believe there is an improvement in the quality of worship over the past year Results: . 86% per cent of those surveyed believed there was an increase in the quality of worship.A survey was conducted in February of 2003. Incorporation and Alberta Government Filing requirements– www.RC4082 GST for Charities .12.Guides are Online .Registering a charity and Federal Government requirements – www.Dissertation on Accounting Principles and Disclosure Requirements sorted by Main Categories 62 .gc.ca .cra-adrc.All Forms are Online . Other Resources and Final Questions .RC4081 GST for Non-Profit Organizations .ca .Sample Financial Statements .RC4108 Registered Charities and the Income Tax Act .cassfraser.gov.Accounting Tutorial explaining common journal entries under the different methods of Accounting .ab.Accounting – www.ca . 13. An Overview of the Canadian Accounting System for NPOs - - the double entry accounting system was invented by Fra Luca Pacioli in 1494 basically it consists of a balance sheet where “debits” are the things you own and the offsetting “credits” show how those assets are spoken for to decrease a debit balance we make a “credit” entry and vice versa an asset is something with a future benefit the benefit of an asset can be received over time as in the case of a capital asset in an NPO. and expenses are decreases in the assets available for future services expenses are debits because they reduce the balance available for future services the most confusing area in NPO accounting is the treatment of temporarily restricted contributions.” No recognition of these revenues is made in the statement of operations until the related expenses are incurred. 63 . while recognizing temporarily restricted contributions immediately. This is the predominant view in the US. Other accountants believe that since restricted donations represent an increase in the assets available for future services they should be recognized as revenue immediately. these contributions continue to be deferred until the related expenses are incurred. However. Even where the restrictions have been fulfilled. Many accountants see temporarily restricted contributions as analogous to “unearned revenues and do not wish to recognize these revenues in the statement of operations until the related expenses are incurred. This is the predominant view in Canada. still attempts to show some matching of restricted revenues with related expenses in the statement of operations by including and reversing these (this can be horrendously complicated to the reader of the statements). the balance sheet shows the total assets on hand and the availability of those assets for future services ( a profit organization would show the availability of assets for distribution to shareholders – retained earnings as opposed to “net assets”) at the highest level. NPO accounting is simple. we simply show the assets available for future services and the change in the assets available for future services. The primary method of accounting in Canada is the “deferral method of accounting for contributions” which presents temporarily restricted donations just outside “net assets. the change is explained in the statement of operations revenues are an increase in the assets available for future services. the US model. BEGINNING of YEAR DR CR ASSETS AVAILABILITY OF ASSETS FOR FUTURE SERVICES things with a benefit CASH Assets not available for future services PAYABLES AND DEBT RECEIVABLES INVENTORY Assets available for future services NET ASSETS $70 thousand CAPITAL ASSETS 64 . S.Economic events resulting in decreases in available assets DRs -270K $150K 65 .END of YEAR (U. capital assets. Model and Canadian Restricted Fund Method) DR CR ASSETS AVAILABILITY OF ASSETS FOR FUTURE SERVICES things with a benefit CASH for Assets not available for future services PAYABLES AND DEBT CR $70K RECEIVABLES Revenues .Economic events resulting in increases in available assets INVENTORY NET ASSETS Assets available for future services CAPITAL ASSETS $350K contributions of $70 thousand cash. promises of cash Expenses . capital assets.Economic events resulting in decreases in available assets DRs -270K $100K 66 .Economic events resulting in increases in available assets INVENTORY NET ASSETS CAPITAL ASSETS END of YEAR Assets available for future services (except as above) $300K contributions of cash. promises of cash Expenses .Deferral Method of Accounting for Contributions DR CR ASSETS AVAILABILITY OF ASSETS FOR FUTURE SERVICES things with a benefit CASH Assets not available for future services Assets associated with temporary restrictions PAYABLES AND DEBT CR DEFERRED CONTRIBUTIONS RECEIVABLES $70K Revenues . tax status and any economic interest Economic Interest .the accounting rules are not clearly defined . investing and financing activities .significant economic interest exists . which is normally a board of directors .14.changes to bylaws or charter require consent. Reporting Entity - What are we accounting for? Controlled Organizations .control may also be deemed to exist if .presumed to exist where the organization can appoint the majority of the board .another organization holds resources to generate revenue or services.proportionate consolidation of for profit entities .or the purposes of the organizations are integrated . .generally an asset only belongs to an organization if it can control it .The first fundamental principle of accounting is that an accounting should be made for the activities under the control of a person or group of persons.otherwise note disclosure of relationship and organization’s purpose.note disclosure Funds held in trust .Concept can be quite significant in the for-profit sector .the ability to influence strategic operating.the ability to determine strategic operating.note disclosure may be the most appropriate 67 . community of service.Definition of control is similar in the not-for-profit sector . or if there is an obligation to fund the liabilities of another organization .consolidation or note disclosure is required Significantly Influenced Organizations . investing and financing activities . Control The ability to control the financial decisions of another organization Presumed to be present if there is the ability to appoint the majority of board members of another organization Other Indicators of Control Significant Economic Interest Ability to Change Bylaws Common and Complimentary Objectives 68 . the next step is to decide how you want to account your activities Unlike for-profit accounting which allows only one method of accounting.A look at the trial balance .Like there are separate sets of books.How this works in the accounting .15. separate sets of statements within the statements .Not necessary to show the balance sheet in separate funds. only totals needed . We will discuss revenue recognition under fund accounting a bit later.Example: Canadian Foodgrains Bank The alternative is Fund Accounting What is Fund Accounting? . there are a number of choices Perhaps the most common set of NPO financial statements presents a single column balance sheet and a single column statement of operations .The common method of fund accounting is the restricted fund method that is used to account for specifically identified externally restricted revenues.Example: Dalhousie Medical Research Foundation . Fund Accounting - Once you’ve established what you are accounting for.A Fund is a self balancing set of accounts 69 . . 885.270.831 Liabilities.039 127.62 224.143 $ 21. Deferred Contributions and Net Assets Current liabilities: Accounts payable and accrued liabilities Deferred contributions Net assets: Restricted Unrestricted $ 1.372.288.119.859 $ 3.752 $ 21.1est 0.142 3.119.207.040 107.20$ .831 Statement of Operations .Year ended March 31.864.563. 2003 2003 Revenue Cash donations Grain donations 2002 $ 4.139 3.498 10.Assets Current assets: Cash and short-term investments Receivables and prepaid expenses Grain inventory Land Capital assets $ 17.632.051 8. Tw09363.878.275 $ 20.139 60. beginning of year 1.679 (1.663.518) 516.122 (267.153 - - 226.884 2.599 Donations 1.440 850. 2003 General Fund Revenue Investment income (Note 4) $ 398.418 Interfund transfers (Note 5) (152. 34… Restricted Fund 2003 .175 151.000 10.966. end of year $ 626.076 59.237 Administrative and support cost 555.645 40.175 - 59.344) 971.097 (4.208) - - $ 2.616 Statement of Net Assets Fund balances.800) 87.306 3.782 84.000 Research Grants 492.458 104.295.953) (333.750 Laboratory renovations 850.186) 5.930 $ 2.430.900 37.791.467 1.412.034 Fund balances.436 (235.994 340.033 (373.714.034 36.176) 1.749.740) (782.957 500.442 45.000 Travel and other (Note 5) 1.442 45.715.858 1.210 418.089 - 833.319.335) $ Endowment Fund 723.219.484.000 2.346 $ (234.786 Expenses Research activities: Equipment grants 226.926 See accompanying notes to the financial statements.091 - 159.754 $ 40.441.326 154.131 $ 36.858.887.795 (256.121 Excess of revenue over expenses (expenses over revenue) (967.427 2.067.574.574.538 441.826 56.097 Less: recovery of grants (4.244.690 530.752.782 87.850 (8.146.489 1.884 (256.679 530.701) 96.089 - 555.701) Associateships 96.251.091 Fall River health forum (Note 5) Fellowships Studentships Prizes and awards 3.319.772) 82.066 Write-down of investments (465.879) 1.491 311.280) 3.740) $ 2002 Total Total 887.697 $ 39.851 78.884 2.Financial Statements of Dalhousie Medical Research Foundation Statement of Operations and Changes in Fund Balances Year Ended March 31.193. 697 $ 39.926 65.784 61.752.000 $ 2.131 - 80.000 626.331 - $ 2.125 Foreign taxes recoverable 545 Due from Dalhousie University 95.125 95.926 .387.752.131 $36.300 $ 119.768 374. …35 .688 Prepaid expenses 3.837 485.064 36.933 39.034 $ 2.701 $ 39.300 Receivables Accrued investment income 3.477.060 - 232.697 39.871.821 - 40. 2003 General Fund Assets Current Cash and cash equivalents $ 30.926 $ 641.754 $ 40.871.791.933 247.722 - 235.754 40.583 28.000 93.118) 36.210.530 (176.667.098 On behalf of the Board Director Director See accompanying notes to the financial statements.784 456.716 Commodity tax receivable` 64.688 3.523 (198.767 2.754 $ 40.477.340 61.385.837 198.$ - - $ 2002 Total Total 30.667.752.837 95.Dalhousie Medical Research Foundation Statement of Financial Position March 31.603 287.574.412.098 $ $ $ 620.119 55.211 Investments (Note 3) Interfund Restricted Fund $ 641.127 $36.377.835 64.815) $ Endowment Fund 2003 Liabilities and Fund Balances Liabilities Current Payables and accruals $ Fund Balances 15. opening balance Flower Pin sales Flower Pin cost of sales Unrestricted contributions Spring fling contributions recognized Administration costs Spring fling expenses cr 350 100 300 100 200 15 450 150 100 500 65 400 1365 1365 73 .long term Deferred capital contributions Deferred contributions Net assets Flower Pin sales Flower Pin cost of sales Capital contributions recognized Unrestricted contributions Spring fling contributions recognized Administration costs Amortization Interest expense Spring fling expenses cr 350 150 100 300 2000 800 100 130 500 400 200 450 450 150 50 100 500 65 100 65 400 3680 3680 Below we separate out the operating fund accounts.capital account Contributions receivable Flower Pin inventory Capital assets Accumulated ammortization Accounts payable Bank loan . We have bolded the accounts for the capital fund. the rest of the accounts are the operating fund.current portion Bank loan .operating account Bank . in order to balance the accounts.operating account Contributions receivable Flower Pin inventory Accounts payable Deferred contributions Operating Fund .Here we present a trial balance for a fictitious organization. note that we need to restate the opening net asset balance. Trial Balance . Operating Fund dr Bank .all accounts dr Bank . pulling out the opening balance for the operating fund. under the deferral method.long term Deferred capital contributions Capital Fund .current portion Bank loan .opening balance Capital Fund .Below we present the capital fund accounts. with the opening balance of the capital fund.opening balance Capital contributions recognized Amortization Interest expense Operating Fund . See the opening balance of the two funds equals the opening net assets we presented earlier.capital account Capital assets Accumulated ammortization Bank loan .opening balance = Net Assets cr 150 2000 800 130 500 400 435 50 100 65 2315 2315 15 435 450 74 . Capital Fund dr Bank . an audit can no longer give an opinion on a basis other than GAAP. or resources are used . Expense Recognition Cash accounting is no longer permitted except under very strict circumstances .the accounting for the use of resources is described on the next page 75 .expenses are recognized when services are received. In accounting for expenses.16. accrual accounting must be used . liabilities are incurred. except for purposes of reporting compliance with agreements etc.almost anything was permitted for NPO’s prior to 1996 . there is a bargain purchase option .Capital Assets .000 .amortization should be straight-line over the expected life of the asset .title to the asset transfers Inventory .the lease period is at least 75% of the economic life .cannot revert to this policy one assets have been capitalized .the present value of minimum lease payments is at least 90% of fair value . preserved and protected items such as works of art and historic treasures do not need to be capitalized if there is a policy to maintain the collection Capital Leases .can use a threshold Collections .inventory of consumable items and items held for resale should be recorded if material 76 .are amortized but may be expensed when purchased if total revenues are less than $500.the asset cost and liability needs to be recognized in the period of the inception of the lease if: .collections of rare.the exception for capital assets does not apply to inventory . Presentation by object and function is required by government organizations. This disclosure would typically be presented in a supporting schedule that reconciles to the expenses reported in the statement of operations. professional fees. voluntary health and welfare organizations. 77 . or program: but preferably not a mix of these methods. for example salaries.Expense Presentation Level of detail can be an issue in NPOs. FASB only suggests this as desirable disclosure. function. For other organizations. and for certain non-profits. FASB No. interest and so on. In the United States. 117 requires the functional classification of expenses. The natural classification of expenses shows expenses by the nature of the expense. it requires the additional disclosure of the natural classification of expenses. depending on who the users are Expenses can be reported by object. 585.000 – 1.762. Note 12) Revenue: (Schedules 1 and 2) Non-renewable resource revenue Freehold Mineral Rights Tax Internal government transfers Other revenue Expenses: directly incurred (Note 2b and Schedules 6 and 7) Voted (Schedules 2.114 2.096.040 15.139 4.485 $ 4.879 1. Department of Resource Development Statement of Operations Budget Department of Resource Development 2000 Actual 81 .200 4.899 82.681.747.599 8.238 35 – 35 185 (29) 156 (70) 30 (40) 87.222 2.937 $ 10.048.184.284 133.562 10.000 135.017 80.761 16.827.307 80. 2001 (in thousands) 2001 Actual $ 4.338 1.955 255.845.086 4. 3 and 4) Ministry support services Resource development and management Energy and utilities regulation Northern development Valuation Adjustments Provisions for doubtful accounts Provisions for vacation pay Total expenses Net operating results The accompanying notes and schedules are part of these financial statements.Department of Resource Development ■ Statement of Operations For the year ended March 31.879 1.149 83.965 61.631 65.198 $ 4.118 16.086 $ 10.861 2.968 – 3.553 61.468 $ 4.843 87.024 (Restated. Department of Resource Development .Department of Resource Development ■ Schedule of Expense Directly Incurred . 2001 (in thousands) 91 Less: Recovery from support service arrangements with related parties Total Voted Expenses (640) (584) (618) $ 87.558 3.743 Supplies and services 25.143 $31.754 83.846 4.365 25.494 26.856 Voted: Salaries.388 87. wages and employee benefits Financial transactions and other Amortization of capital assets Total voted expenses before recoveries Department of Resource Development Schedule 3 S c h e d u l e o f E x p e n s e D i re c t l y I n c u r re d For the year ended March 31.Detailed by Object Budget 2001 Actual 2000 Actual $ 33. Costs incurred for these services are recovered from Alberta Environment.925 21.088 71 64 77 4.706 $ 32.238 The Department provides financial services to Alberta Environment and Alberta Agriculture Food and Rural Development.445 80.027 19.560 Grants 23.861 $ 80.114 $ 82. Membership fees over the period of the membership. and the forgiveness of debt Contributions can be unrestricted or restricted The donor’s designation can be implicit or explicit Not required to record contributed materials and services . a percentage of amounts to be received might be based on past history 80 .must disclose policy .may record either or both. and Sales and Service Revenue Everything other than contributions is accounted for using for-profit accounting rules . royalties when received. materials and services.must otherwise be purchased . no option on contributed capital assets .amounts must be reasonable estimable . contributions of capital assets.can use note disclosure of volunteer hours etc. and would include grants.Sales and service revenues when earned . there should also be reasonable assurance regarding the amount to be received.Contract revenue matched proportionately against the expenses. if there is an obligation to be fulfilled by the organization . through history or the actual receipt after the year-end.Interest income over time when earned. dividends when declared . however the revenues and expenses may be deferred until completion if there are significant uncertainties about progress to completion Contributions A contribution is a non-reciprocal transfer.17. Contributions Receivable must be recorded - No different than any other receivables. Pledges are recorded when the organization has been promised the money Grants are receivable when approved There should be evidence the pledge or grant existed at year-end and was approved eg verbal evidence is likely insufficient for audit purposes There must be assurance of collection to recognize a pledge. Revenue Recognition Revenue Recognition of Investment. credit deferred contributions: a balance sheet account.The amount of unspent externally restricted contributions held in a restricted fund needs to be tracked as there may be internally restricted transfers to a restricted fund - An organization may chose to set up as restricted funds at any time for any purpose. the contribution must be accounted for in the general fund which will use the deferral method of accounting for contributions - All unrestricted revenues should be recognized in the general fund. for Canadian Foodgrains Bank on Page 70 Accounting for Restricted Contributions under the Restricted Fund Method - This method is typically used by Foundations and organizations wanting to separate the accounting for certain activities – Dalhousie Example on Page 72 - When a contribution is received into a restricted fund and not spent. like unearned revenue or accounts payable Sample Journal Entries.” If a contribution is received and there is no restricted fund set up for it.When the money is received the entry is debit cash. the contribution is recognized when the related expense occurs . it becomes part of the ending fund balance .Accounting for Unrestricted Contributions An unrestricted contribution would be recognized as revenue when it is received or receivable. Accounting for Restricted Contributions under the Deferral Method of Accounting for Contributions - Under deferral method of accounting for contributions.Until the expense occurs the amount received is treated as a type of liability . including unrestricted sales and service revenues: however external restrictions may exist for example by way of gaming license requirements 81 . This is the case under the deferral and restricted fund methods. - There must be a general fund for the organization’s “general operations. a restricted contribution can only be recognized as “earned” when the organization uses the contribution on the purpose designated by the donor. 1) On receipt of the donation Dr Cr 2) When the expense is recognized Dr Cr Dr Cr Someone makes a $20.000.000 contribution to pay the insurance invoice for one year’s insurance Sept 30 to Sept 30. 1) On receipt of the donation Dr Cr 2) On purchase of the insurance Dr Cr 2) When the current year’s expense is recognized Dr Cr Dr Cr 82 .Sample Journal Entries – Contribution Recognition under the Deferral Method Someone makes a $1.000 contribution to pay for wheat for Afghanistan. Someone makes a $15.000 donation to purchase a tractor for harvesting wheat. 1) On receipt of the donation Dr Cr 2) When the asset is purchased Dr Cr Dr Cr 3) As the asset is amortized Dr Cr Dr Cr 83 . We can separate the net asset balance into a number of categories .Externally restricted net assets . payables etc.Internal restrictions .Other External Restrictions. - Graph of the Balance Sheet .Athabasca University example The Statement of Cash Flows - details the sources and uses of cash the indirect or direct method may be used examples the direct method may be preferable in that it shows exactly who the money came from and was distributed to.Contributions . The Statement of Changes in Net Assets and the Statement of Cash Flows The Statement of Changes in Net Assets: Accounting for Internally Restricted Amounts. eg.18. Lottery Money .Unrestricted Balances - We account for the changes in the net asset balance on the statement of changes in net assets . focus is on the balance sheet 84 . mirrors the statement of operations the indirect method may be effective in showing how operations were financed – through the management of receivables. and Changes in the Investment in Capital Assets.Investment in Capital Assets . Graph of the Balance Sheet of an NPO 20 thousands 20 40 Capital Assets 40 Assets Liabilities 20 Net Assets or Fund Balances on the Restricted Fund Method Deferred Contributions or Externally restricted fund balances unrestricted internally restricted 60 invested in capital assets Net Assets on the Deferral Method Liabilites and Net Assets Net Assets plus Deferred Contributions on the Deferral Method = Net Assets or Fund Balances on the Restricted Fund Method 85 . 598 Current portion of obligation under capital lease (Note 10) Obligations under capital lease (Note 10) Unamortized deferred capital and deferred course development contributions (Note 11) Deferred capital contributions (Note 12) Net assets Unrestricted $45.Statement of Financial Position Page 1 of 1 Liabilities and Net Assets Current Liabilities Accounts payable and accruals $1.athabascau.ca/report2002/financ.834 $1.455 3.Athabasca University Annual Report 2002 .639 Due to Joint Venture (Note 4) 398 - 47 429 15.038 1.htm 11/11/2004 .878 13.274 15.682 6.373 14.472 Endowments (Note 13) 1.763 - 1.995 Deferred contributions (Note 9) 957 1.089 1.347 http://www.511 153 200 13.960 $44.295 16.749 Investment in capital assets (Note 7) 9.755 Deferred revenue (Note 8) 7.471 8.261 - 30.089 Internally restricted (Note 14) 4.693 Salaries and benefits payable 4.735 5.665 27. 472 $1.Athabasca University Annual Report 2002 .028 - - $9.478) 2. 2002 (thousands of dollars) 2002 2001 Investment in Capital Internally Assets Endowments Restricted Unrestricted Balance.$15.345) - - Repayment of obligations under capital lease 429 - - (429) - - Capital contribution for land 175 - - - 175 - Less amortization of internally funded assets (1.Statement of changes in Net Assets Page 1 of 1 Annual Report 2001-2002: Statement of Changes in Net Assets For the year ended March 31. end of year http://www.598 $17.ca/report2002/assets_print.028) 1.598 11/11/2004 .345 - - (2.471 $1.205 (607) $ .athabascau.950) - - 1.478) (1.089 $4.763 - - - (1. beginning of year Total Total $8.950 - - Interfund transfers - - (1.274 $16.htm $1.089 $5.735 Excess of expenses over revenue Investment in capital assets Balance.295 $16. 2000 2000 1999 Cash Flows from Operating Activities Cash received from contributors $ Cash received from flower pin sales 800 $ 700 200 500 (500) (550) (60) (70) 440 580 10.cassfraser.html $ 940 $ 500 11/11/2004 .ca/html/gaap/direct_method.200 - (10.200) - Contribution for debt repayment 100 - Contribution of desk 200 - Contributed desk put in service (200) - Repayment of loan principal (100) (100) - (100) Net increase in cash 440 480 Cash at beginning of year 500 20 Cash paid to suppliers Loan interest paid Cash Flows from Financing and Investing activities Contribution for endowment Purchase of bond Cash at end of year http://www.Cass Fraser Accounting Page 1 of 1 SpringTime Statement of Cash Flows For the Year Ending December 31. 815 806.000 (67.305) 94.006.108 572.622) 477 (33.998) (7.199.042 (227.198.410 (10.108 804.003 $ 2003 705.367.255 Cash. end of year $ 2.393 (32.562 757.450 $ 1.909 2.728) 595 (206.367.164 .101 689.204 124.REAL ESTATE COUNCIL OF BRITISH COLUMBIA Statement of Cash Flows Year Ended June 30. beginning of year 458.168.081 5.709 $ 2.265 $ 2.461) (67.264) 35.164 1. net of contributions applied Sale proceeds of equipment Net increase in cash Cash.265 $ 2.164 Cash is comprised of: Cash and cash equivalents Short term investments $ 1.133) 361.316.206) 567.006. 2004 2004 Cash flows from (used in) operating activities Excess of revenue over expenditures for the year Items not involving cash: Amortization Loss (gain) on sale of equipment $ Change in non-cash working capital Increase in accounts and accrued interest receivable Decrease (increase) in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Cash flows from (used in) investing activities Purchase of equipment.716 (14.455 1.461) 21.006. you may want to prepare your monthly statements or annual statements on a cash basis or simple accrual basis.account for the use of all externally restricted donations and grants Otherwise See Chart for GAAP 90 . Accounting Principles Wrap-up: Options Available to NPOs An accounting change must result in a more appropriate presentation The First option is whether or not to follow generally accepted accounting principles (GAAP). If you are not seeking an unqualified audit opinion or review engagement report and you do not feel the readers are going to be well served through the application of Canadian GAAP. I would recommend at least the following: .19.accrue all payables and receivables to get a better picture of your financial position .maintain good records of the cost of purchased assets and fair value of donated assets . and therefore total revenues and expenses Revenue recognition rules are easy to cannot be shown on a line by line basis understand An easy method of tracking externally restricted contributions Net Assets – Fund Balances represent the assets available for future operations Requires accounting staff to have a knowledge of fund accounting Deferral Method Pros Cons Can present a single column statement of operations and statement of financial position More complicated revenue recognition rules Revenue recognition may be more appropriate for not-for-profits with a “net-income” focus The most widely used method in Canada Revenue recognition follows “for profit” model Results in a net asset balance on the statement of financial position that is not representative of the ability to provide future services 91 .The Options Pro’s and Cons Restricted Fund Method Pros Cons A good way to separate the revenues and expenses.” and it may be more difficult to capture the whole picture It is not possible to add funds across the statement of operations. and ending surpluses of given activities or cost centres Statements are “bigger. in terms of recording depreciation and the amortization of deferred capital contributions A better representation of the true service potential on the statement of financial position Accurate historical records may not be available Encourages more accurate recordkeeping for capital assets and possibly better control over assets Organizations with significant real estate may be showing undervalued assets Recording Contributed Materials and Services Pros Shows a more complete picture of the resources received and used Establishing the value of resources required may help in planning. This may be time consuming and possibly impractical.The Options Pro’s and Cons Capitalizing Assets Organizations with Gross Revenues < $500.000 Pros Cons May need to capitalize assets in the future once revenues exceed $500. especially if these resources may need to be purchased in the future Cons Requires valuations to be made.000 Requires more complex accounting. Disclosure of amounts subject to significant uncertainty is appropriate only in the notes Provides more donor recognition with respect to the value of contributed materials and services 92 .