Overview of the Distinguishing Characteristics of Not-for-Profit Organizations (3)

The treasurer has significant responsibilities, including the following:

1. Keeping financial records.

2. Preparing accurate and meaningful financial statements.

3. Budgeting and anticipating financial problems.

4. Safeguarding and managing the organization’s financial assets.

5. Complying with federal and state reporting requirements.

While this list certainly is not all-inclusive, most of the financial problems the treasurer will face are associated with these five major areas.

In the public company commercial accounting environment, the role of the Board of Directors (including Board members that are part of an organization’s Audit Committee) has come under close scrutiny recently. This scrutiny has a number of different causes, but certainly the inappropriate (or perceived inappropriate) application of accounting principles by a number of these public companies can be described as one of the more important contributors leading to this scrutiny.

While the circumstances receiving public attention relate primarily to public companies, not-for-profit organizations are not immune to the misapplication of accounting principles. Boards of Directors, management, and independent auditors of not-for-profit organizations must be vigilant to ensure that accounting principles used are appropriate and are appropriately applied. In addition to meeting the “letter of the law” as found in various accounting standards, not-for-profit organizations must ensure that the application of generally accepted accounting principles to their financial statements results in statements that present fairly the activities and financial position of the organization.

Taken From : Wiley Not-for-Profit Accounting Field Guide 2003

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