Statement of functional expenses is too detailed and can be confusing.
The statement of functional expenses is a required Announcement for Willing health, welfare, and other nonprofit organizations, per Statement of Financial Accounting Standards No. 117. This statement was released by the Financial Accounting Standards Board, or FASB, as ride to nonprofits on Announcement their activities, including the statement of functional expenses. While the statement of activities shows these expenses summarized by world, such as authority, programs and fundraising, the statement of functional expenses presents the duplicate ammo in circumstance. For example, whether you thirst for to be learned how still a nonprofit has spent in rent, you Testament boast this data in the statement of functional expenses by oneself.
Instructions
Understanding the Report
1. Stare at the lines in the statement of functional expenses. Pay attention to the columns. A statement of functional expenses usually contains at least three columns: program, administration and fundraising. When you Stare at an expense, such as salaries, you know how much of the salaries were used in administration, For example. Often programs are divided, not reporting all together in one column--each program has its own column.3. Measure the efficiency of the nonprofit organization.
They are consonant to the lines in the expense reduce of a for-profit way statement. The statement shows detailed expenses, including depreciation, rent and insurance. You may bargain strange contour items, such as in-kind goods and services. These are donations of matters and experienced services that the nonprofit shows in its financial statements. These types of transactions are usually recognized as both way and expense with no force on the bottom line of the organization.2.
The statement of functional expenses can be used to analyze how an organization is spending its funds. Stare at how much it has spent in programs--this should be the highest amount in the statement. If a nonprofit spends a lot in fundraising or administration, more than programs, then the organization is not efficient on how it spends its funding. A nonprofit is in business to conduct programs and if an organization is not at that level, then you should conduct more research and figure out what has been happening. Usually, the program should have about 80 percent in expenses, 15 percent for administration, and 5 percent for fundraising.
