Icon Systems Inc felt it was important to have their software reviewed by an outside CPA firm to ensure we were delivering the most comprehensive software that is available today for churches. While there are many companies out there that tout their products are far more superior, few have actually been reviewed by 3rd party companies to see just how their software adheres to FASB regulations like the 95 and 117.
The FASB 95 regulation dictates the Statement of Cash Flow reporting. The statement of cash flows helps organization like churches understand how the financial resources are coming into and out of the organization over a period of time rather than at a specific point in time like other financial statements. It also tell the organization if they generated cash. This differs from the income statement where it can tell you if an organization made a profit. You could have an organization that made considerable amount of money (in flow of cash) but still be in debt according to the income statement because of start up cost or other things. While the FASB 95 does not require the cash flow document the FASB 117 does correct this oversight and extends the requirement to not-for-profits.
The FASB 117 regulation requires all not-for-profits (non-profits) to provide the following:
- statement of financial position
- statement of activities
- statement of cash flows
Other requirements in this regulation state the following: “It requires reporting amounts for the organization’s total assets, liabilities, and net assets in a statement of financial position; reporting the change in an organization’s net assets in a statement of activities; and reporting the change in its cash and cash equivalents in a statement of cash flows.” It also states the following: “It requires that the amounts for each of three classes of net assets—permanently restricted, temporarily restricted, and unrestricted—be displayed in a statement of financial position and that the amounts of change in each of those classes of net assets be displayed in a statement of activities.”
Because of these regulations that non-profits should adhere to is the reason we had our software reviewed to ensure it was compliant. See our more in depth post and the accompanying links! Companies that have not done this will fail when it comes to the proper reporting. If you have any questions as to these issues please give us a call at 1-800-596-4266 or visit our web site. You can also email us at firstname.lastname@example.org