Financial Reporting

1. Financial Reporting 2007 National Leadership Conference

2. Association Financial Reports • Statement of Financial Position (or Balance Sheet) – Shows what the assets, liabilities and net assets of association were at a given point in time.

3. Association Financial Reports • Statement of Activities (Statement of Revenue and Expenses) – Shows what comprised the income and expenses of the operation for a given period of time, and whether there was a gain or loss in net assets.

4. Association Financial Reports • Statement of Cash Flows – Tells where the organization got the funds it used and what it spent them on. Old format had its analysis based on the chapters in assets and liabilities; the new format focuses mainly on where cash came from and how it was used.

5. How to Read a Statement • Always check the heading first. They will tell you. • What unit, organization or group or organizations is reported on. • What type of statement is being provided. • What is the relevant period of time (Statement of Activities, Statement of Cash Flows) or date (Statement of Financial Position).

6. How to Read a Statement d. What comparable information is being provided: • For a Statement of Financial Position, usually the org’s position at the same time in the prior year. • For a Statement of Activities or Cash Flows, usually the same period in the prior years • Budgeted figures or percentages may be provided on Statements of Activities

7. How to Read a Statement 2. Scan the page as a whole – most statements are shown complete on one page. Once you understand major Divisions of the statement, you can work more confidently on the detail in each section.

8. Statement of Financial Position • Almost always broken into two major categories – assets on top and liabilities and net assets on bottom. • Assets are broken down into subcategories: • Current assets • Fixed assets • Other assets • It is called a balance sheet because assets must equal (balance with) liabilities plus net assets.

9. Statement of Financial Position • What kinds of things to look for: • Have the current assets increased or decreased? • Any major fixed assets purchased or sold? • Any new debt taken on or old debt paid off? • Any new unusual liabilities show up? • If statement has more than one time period, how has the org changed during that time?

10. Statement of Activities • Almost always broken into two major categories – income (on top) and expenses underneath. • Income will be shown by type, and then totaled. • Expenses will be shown by type, and then totaled. • Sometimes the Change in New Assets will be shown as the “bottom line”/

11. Statement of Activities • What kinds of things to look for: • Has the gross income gone up or down? • How have the key sources of income changed? • Are total expenses up or down? Which individual expenses have changed significantly? • How does the change in expenses relate to the change in income? • How does this period’s Change in Net Assets compare to that of prior periods?

12. Statement of Cash Flows • Divided into Three Parts: • Cash Flows from Operating Activities • Cash Flows from Investing Activities • Cash Flows from Financing Activities

13. Notes to Financial Statements • Notes are important in helping a reader understand an organization’s financial situation. • Notes will highlight significant accounting policies to start with and then go to detailed reports on matters of significance. • Major acquisitions or changes in operations are highlighted as are pension funding requirements, pending law suits and other significant information.

14. Supplemental Schedules • Organizations will provide more detailed information than what is required. • Auditors will attach a separate opinion followed by additional statements following notes in the audited report. • This opinion will indicate the level of assurance the auditor is providing on these statements.