Financial Statements and Variance Analysis for Non-Profit Organizations

This presentation covers actual results of non-current assets, current liabilities, and current assets. It also discusses variance analysis, the difference between standards for profit and non-profit entities, and features of financial legislation. The presentation provides insights into the financial position of non-profit organizations and their reporting requirements.

Presentation of financial
statements

Actual results of non current assets
(% form)
2.36
%
5
.
9
0
%
60.18
%
3.30
%
Portion of non current assets
Trade & Other
Receivables
Available for
Sale
Investments
Property, Plant
& Equipment
Goodwill
Other Intangible
Assets

Actual results of non current assets
(dollar ($)form)
20,00
0
5
0,
0
0
0
510,
000
28,00
0
Portion of non current assets
Trade & Other
Receivables
Available for
Sale
Investments
Property, Plant
& Equipment
Goodwill
Other
Intangible
Assets

Actual results of current liabilities
Trade & Other
Payables
Short-term
Borrowings
Current
Portion of L/T
term
Borrowings
Current tax
liabilities
Short-term
Provisions
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
38,200
81,200
15,000
21,500 21,000
Current liabilities
Series1

Actual results of current assets.
Cash and Cash Equivalents
Trade & Other Receivables
Inventories
0 50,000 100,000 150,000 200,000
35,000
32,500
172,000
Current assets
Series1

Actual results and the budgeted results
TOTAL ASSETS TOTAL
LIABILITIES
TOTAL EQUITY
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Actual VS Budgted
ACTUAL RESULTS
BUDGETED FIGURES

Variance analysis
By conducting a variance analysis, it has
been observed that the actual results are less
than the budgeted ones.
The budgeted assets are $946,000 against
which actual results shows $847,500.
Similarly budgeted liabilities are $370,150
and actual are $298,550.
Reduction in liabilities is favourable whereas
reduction in assets may affect the financial
position negatively.

Difference between standards for profit
and non-profit entities
For profit firms, revenues and gains are
recorded in the income statement. In
contrast, NPOs prepare a statement of
activities in which expenses are properly
classified against the revenues to figure out
surplus or deficit.
The key difference is the concept of fund
accounting.
Profit entities will have a single ledger which
is a self balancing account. On the other side
non profit will prepare number of general

Difference between standards for profit
and non-profit entities
NPOs are required to account for donations
and grants as they are their sources of
revenue.
Generally, profit entities prepare their
statements using accrual method. In contrast,
non profit apply deferral method or restricted
fund method to recognize the revenue.
The main aim for profit companies is to
prepare the statements for showing
profitability whereas NPOs focuses on
providing meaningful information.

Features of financial legislation
Taxable Transactions
The Australian government provide many tax
concessions to the NPOs.
According to ATO, if the NPO is considered as
charity then it is exempted from income tax.
Charities are need to be registered with
Australian Charities and Not-for-profits
Commission (ACNC) in order to get tax
concessions.

Features of financial legislation
Reporting Requirements
The non profit organizations are obliged to
prepare and submit financial information as
per their legal structure, fund raising
requirement and others.
NPOs that are under limited by guarantee
are required to report to ASIC under
Corporation Act 2001.
The non profit entities that undertake
fundraising are obliged to submit their
audited financial records to the state

References
Council on Foundations (2018). Australia. [Online].
Available at: https://www.cof.org/content/australia
AIC (2018). Regulation of the non-profit sector.
[Online]. Available at:
https://aic.gov.au/publications/rpp/rpp114/regulatio
n-non-profit-sector
ATO (2014).Tax basics for non‑profit organizations.
[Online]. Available at:
https://www.ato.gov.au/uploadedFiles/Content/SME
/downloads/Nonprofit16966Tax_basics_for_non_pro
fit_organisations.pdf