In preparation for preparing the financial statements for Boonville Public Health Center, you need to review the financial reporting requirements for governmental and nonprofit organizations. Your assignment is to determine:
(1) The governing authority for regulating the financial reporting of both governmental and nonprofit organizations
(2) The financial statements required
(3) What is required in the notes and other narratives in the annual report?
All references must be in APA format.
Financial reporting is an important tool for an organization whether it is a profitable organization, a non-profit organization or a government entity. Financial reporting provides information about the organization such as operating performance during a period, economic resources of a firm, and financial activities during the year. This information is useful in making financial and credit decision. Nonprofit and governmental organization both work for improvement of society and not having the objective of profit making. Still governmental and nonprofit organizations require financial reporting to assess financial position and economic condition, evaluate the efficiency and effectiveness, determine the regulation, and compare the actual result with budget. Nonprofit and governmental organizations also prepare the financial statement on the basis of accounting standards, which is set by regulatory authorities (Alexander, Britton & Jorissen, 2007).
Regulating Authorities for Governing Financial Reporting
Accounting standard are very important to protect the interest of investors and general public. Accounting standards are required for preparing the financial statements of the organizations. These standards are made by the some regulating authorities that include both government as well as non government agencies (Ingram & Albright, 2006). But some special regulation authorities are established to guide nonprofit and governmental organization in their financial reporting. Some of the regulation authorities are as follow -
Financial Accounting Standard Board (FASB):
Financial accounting standard board is the primary organization for setting accounting standards for business in US. It was established in year 1973 and as a non government regulation authority. FASB established the accounting and financial standards for both governmental and nonprofit organization, which provide the guidelines in making financial statement. The financial reporting standards enforced by FASB are applicable for all type of the business organizations except federal government (Ingram & Albright, 2006).
Government Accounting Standard Board (GASB):
Government Accounting Standard Board (GASB) establishes the accounting principle or standards for financial reporting for non-profit and government business entities. The standards set by GASB are used by the state and local government organizations in their financial reporting. GASB divides the objectives of accountability in three sections such as inter period equity, budgetary & fiscal compliance, and costs. GASB set the standards for organizations such as colleges and universities, hospitals etc. as all are included in governmental and nonprofit sector (Granof & Wardlow, 2003).
American Institute of Certified Public Accountants (AICAP):
AICAP establishes the accounting standards in rule 203, which provide guidance by industry audit guide and statements of ...
The financial reporting requirements for Boonville Public Health Center is examined.