Create Effective Statements Of Functional Expenses

Webinar: ID# 1021672
Recorded CD
About This Course:
Most nonprofit organizations are required to present expenses in the statement of functional expenses for reporting purposes. This includes the functional allocation of expenses between program, administrative and fundraising.

On the surface this appears to be a relatively simple requirement, but proves to be a challenge faced by the industry. Understanding the GAAP and IRS Form 990 requirements, the current focus of standardsetters, challenges faced within the industry as well as the allocation methodologies available and best practices covered within this webinar is an important first step in creating effective statements of functional expenses for all organizations.


Current Focus on Statement of Functional Expenses
  • Update on Nonprofit Myth Initiative
  • Historical Data on Inaccurate Reporting by NFPs
  • Comparison of Two National NFPs
  • Statement of Functional Expenses as an Efficiency Measure
Industry Issues
  • Inconsistency in Reporting Among NFPs
  • Donor Focus on Overhead Rates
  • SFE as a Measure of Efficiency
  • Resource Issue
  • Common Errors
  • No Allocation of Expenses
  • Inconsistent Reporting Between Form 990 and Audited Financials
  • Contribution Revenue but No Fundraising Costs
  • Incorrect Reporting of InKind Donations
  • Allocation of Costs Annually With Standard Annual Allocation Policy
  • Fixed Percentages for Cost Allocation Rather Than Using Actual Percentages
  • Resources – Challenges
  • Finance and Accounting Challenges
  • Underlying Recordkeeping Challenges of Implementing Change
  • Fundraising for Unrestricted – Administrative Costs vs. Program
Professional Standards
  • GAAP Definitions
  • Program Services
  • G&A Expenses
  • Fundraising Costs
  • IRS Form 990 Definitions
Allocation Methodologies
  • Allocation of Costs
  • Direct; Indirect
  • Allocation Bases Commonly Used
  • Salaries; Square Footage; Headcount
  • Organizational Allocation Policies
  • Joint Costs SOP 98-2
Best Practices
  • Determination of Program Categories
  • Direct vs. Indirect Costs
  • Cost Allocation Policies and Procedures
  • Annual Review of Cost Centers – Consideration for Changes in Funding or Organizational Restructuring
  • Big Picture on Efficiency
  • Governance Aspects for Management and Board Members
About The Presenter

Catherine Bendall, CPA, CGMA, PSA
  • Partner with WithumSmith+Brown
  • More than 25 years of experience in highly complex not-for-profit and governmental audits of many types
  • Involved in audits at agencies funded by federal, state and local sources
  • Performs a number of financial audits and compliance audits, single audits, under OMB regulations
  • Familiar with the operations, accounting and reporting of not-for-profit organizations, and is also familiar with the fiscal policies and procedures surrounding those types of transactions
  • Member of the firm’s Not-for-Profit & Educations Services niche
  • Member of the American Institute of Certified Public Accountants (AICPA) and the New Jersey Society of Certified Public Accountants (NJSCPA)
  • B.S. degree in business economics, Cook College, Rutgers University
Create Effective Statements Of Functional Expenses
Available on CD format
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