The Cpa And Non-profit Accounting

While a certain business organization may be operating not primarily for profit

, it is still necessary that appropriate accounting take place to measure its financial performance. Audited financial statements are the accounting tool used by federal and state governments to measure the financial accountability and accuracy of a certain non-profit organization. This is so because it is in the government, and in some other institution that has more or less the same interest, from which a non-profit organization gets funding for its financial operation.

The audited financial statements must be prepared by a Certified Public Accountant (CPA) who has no interest between the two parties the non-profit organization and the federal government to ascertain the accuracy and reliability of the output of the audit. This he does using the financial statements given by the organization, which includes documents relaying the organizations cash flows, statement of income and expenses, as well as balance sheet.

The Certified Public Accountant audits the documents as to whether the financial statements support the figures stated, analyzes the accounting principles used whether they conform to generally accepted accounting principles, and assesses the presentation of the overall financial statement. Among the standards followed are the Generally Accepted Auditing Principles, the Financial Accounting Standards Board, and Internal Revenue Service.

Once the financial statements have been properly audited, the Certified Public Accountant will need to give an opinion, whether qualified or unqualified, regarding the financial documents nature. A financial statement that bears an unqualified opinion means that the organization has prepared the financial statements in conformity with the accepted accounting methods and standards and that the management used the right method of accounting for non-profit organizations.

A qualified opinion, on the other hand, means that the CPA does not find certain aspects of the financial statements to be free from material misstatements or false representation. This opinion tells that the accounting for non-profit organization used by the management is not fairly correct or accurate.

There are some instances, however, when the Certified Public Accountant will not give any opinion on the financial statement audited. This may be because of the insufficiency of financial documents presented by the management to assure the reliability of the figures being audited or there were some other relevant issues that require proper attention and consultation with the management before evaluating the financial statements accuracy. A financial statement that does not bear any opinion at all indicates that the management needs to improve the methods and policies of accounting for non-profit organization it follows.

by: Tom Hope

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