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ACCT 420 Not-for-Profit Accounting Course GuideCourse Guide

Course Description

This course presents the underlying framework and concepts of Governmental and Not-for-Profit Accounting in the context of how such accounting fits into the overall business environment of contemporary society. Governmental accounting is the basic means of recording and reporting financial information for State and Local governments. Additionally, students will learn the unique accounting and reporting requirements of not-for-profit organizations. Students will discover the uses and limitations of such financial statements and related information and apply analytical tools in making both business and financial decisions. Topics examined include those related to financial position, operating results, cash flows, and financial strength. Students will study the basic accounting systems and will be shown how the various accounting alternatives for recording financial transactions impact on the usefulness of the information provided for decision-making. 

Assessable Course Objectives

The primary learning objectives for this course are students will demonstrate:

  1. the ability to communicate in a clear, concise, and technically correct manner through writing papers

  2. the ability to make journal entries and create a Comprehensive Annual Financial Report.

  3. the ability to conduct research and then applying that knowledge in decision making.

  4. the ability to distinguish between commercial and governmental and not-for-profit generally accepted accounting principles.

Syllabus Requirement for Life Long Learning

In order to support our students’ development into Life-Long Learners, students will be encouraged to join the appropriate professional organization. Each instructor should include in their syllabus a statement encouraging students to join the AICPA   or the New York State Society of CPAs

Course Outline

I.      Financial Reporting: Governmental and Not-for-Profit Entities

A.    Distinguish differences from for-profit entities
B.     Identify authoritative bodies for financial reporting standards
C.     Compare and contrast the differing objectives of financial reporting
D.    Describe the basic financial statements
E.     Explain the different objectives, measurement focus and basis of accounting  Of the government-wide and fund financial statements of state and local governments

II.     Principles of Accounting and Financial Reporting for State and Local Governments.

A.    Explain the nature of the three major activity categories
B.     Explain the components of GASB’s integrated accounting and financial reporting model, including.
         The reporting entity
         Government-wide financial statements
         Fund financial statements
         Definition of fund and principles of fund accounting
         Major fund reporting
         Types of funds in each category and characteristics of each type

III.     Governmental Operating Statement Accounts; Budgetary Accounting

A.    Explain how governmental activity operating revenues and expenses are classified and reported in the government-wide financial statements.
B.     Distinguish, at the fund level, between Revenues and Other Financing Sources and Expenditures and Other Financing Uses
C.     Explain how revenues and expenditures are classified in the General Fund
D.    Explain how budgetary accounting contributes to achieving budgetary control over revenues and expenditures

IV.             Accounting for Governmental Operating Activities

A.     Analyze  typical operating transactions for governmental activities and  prepare appropriate journal entries at both government-wide and fund levels
B.     Account for expense recognition at the government-wide level and expenditures at the fund level for goods encumbered in the prior year
C.     Explain budgetary comparison schedules
D.     Explain the difference between exchange and nonexchange transactions, and classification of nonexchange transactions
E.     Explain and make entries for internal exchange transactions
F.     Prepare adjusting entries
        1.      Reclassification of property taxes to delinquent status
        2.      Accrual of interest and penalties for property taxes
        3.      Adjustment for inventories

G.    Complete the accounting cycle, including closing entries
H.    Prepare General Fund financial statements
I.      Account for operating grants and other financial assistance using special revenue funds
J.     Account for interfund transactions; distinquish between intra- and inter- activity transactions; and explain accounting for intra-entity transactions
K.    Account for transactions of a permanent fund

V.    Accounting for General Capital Assets and Capital Projects

A.    Describe the nature and characteristics of general capital assets
B.     Account for acquisitions (including infrastructure assets)
C.     Account for maintenance and dispositions
D.    Account for depreciation (including modified approach for infrastructure)
E.     Explain the purpose and characteristics of a capital projects fund
F.      Explain the typical sources of financing for capital projects
G.    Prepare journal entries for a typical capital project, both within the capital projects fund and within the governmental activities category at the           government-wide level
H.    Explain and prepare journal entries for special cases such as:

       1.      Alternative treatement of project surpluses or deficits at completion
       2.      Original issue premiums/discounts and accrued interest

I.       Explain the concepts and accounting procedures for special assessment Capital Projects
J.       Prepare financial statements for capital projects funds.

VI.             Accounting for General Long-Term Liabilities and Debt Service

A.    Explain what types of liabilities are classified as general long-term liabilities
B.     Make the journal entries in the governmental activities general journal to Record

        1.      the issuance and repayment general long-term liabilities
        2.      general long-term liabilities from capital lease agreements

B.     Prepare a schedule summarizing changes in general long-term liabilities
C.     Describe the reasons for and nature of statutory of debt limits and explain the meaning of debt margin and overlapping debt.
D.    Explain the purpose and types of debt service funds
E.     Make appropriate journal entries to account for debt service transactions
F.      Describe the required fair value reporting of investments held by debt service Funds
G.    Describe the accounting procedures and make appropriate journal entries for special debt service transactions

VII.          Accounting for the Business-Type Activities of State and Local Governments

A.    Distinguish between the purposes of internal service and enterprise funds
B.     Describe the characteristics of proprietary funds
C.     Explain the financial reporting requirements, including the differences in reporting of enterprise funds and of internal service funds in the government-wide and fund financial statements
D.    Explain the characteristics, accounting procedures, and termination of internal service funds
E.     Prepare journal entries and describe financial reporting requirements for an internal service fund
F.      Describe the characteristics and specialized accounting procedures for enterprise funds
G.    Prepare journal entries and financial statements for an enterprise fund

VIII.       Accounting for Fiduciary Activities—Agency and Trust Funds

A.    Explain the purpose of fiduciary funds and distinguish among agency funds and trust funds (private-purpose, investment, and pension)
B.     Describe the uses for and characteristics of agency funds
C.     Explain the operations of and accounting and financial reporting for Commonly used agency funds
D.    Explain the creation, operation, accounting, and financial reporting for:

       1.      A cash and investment pool(including an investment trust fund)
       2.      A private-purpose trust fund
       3.      A pension trust fund

IX.             Financial Reporting of State and Local Governments

A.    Describe the financial reporting requirements of the GASB 34 reporting Model
B.     Explain the key concepts and terms used in describing the governmental reporting entity
C.     Apply the GASB criteria used to determine whether a potential component. Unit should be included in the reporting entity and when included, the manner of reporting component units
D.    Identify and describe the contents of a comprehensive annual financial report
E.     Identify and explain contemporary financial reporting issues

X.                Accounting for Not-for-Profit Organizations (NPOs)

A.    Distinguish NPOs from entities in governmental and commercial sectors
B.     Identify the authoritative standards-setting body for establishing GAAP for nongovernmental NPOs
C.     Explain financial reporting and accounting for NPOs

       1.      Required financial statements
       2.      Classification of net assets
       3.      Accounting for revenue, gains, and support
       4.      Accounting for expenses
       5.      Accounting for assets

D.    Describe optional fund accounting
E.     Identify the unique accounting issues of financially interrelated organizations
F.      Prepare financial statements using SFAS 117

XI.             Accounting for Colleges and Universities

A.    Distinguish between GAAP for public and private colleges and universities
B.     Describe financial reporting for public and private colleges
C.     Discuss accounting and reporting issues for all colleges, such as

        1.      Accounting for Assets, Liabilities, and Net Assets
        2.      Accounting for Revenues and Expenses
        3.      Accounting for Cash Flows

D.    Journalize transactions for private colleges and govt.
E.     Prepare financial statements for governmentally owned colleges (GASBS 35)
F.     Prepare financial statements for private colleges (SFAS No. 117)
G.    Discuss managerial, auditing, and reporting issues, such as:

       1.      Performance measures
       2.      Auditing
       3.      Federal financial assistance
       4.      Related entities

XII.          Accounting for Health Care Organizations

A.    Describe different organizational forms for health care service providers
B.     Identify authoritative accounting literature that governs health care entities
C.     Describe financial reporting for health care organizations
D.    Explain unique accounting and measurement issues in health care. Organizations including accounting for revenues, expense, assets & liabilities
E.     Journalize transactions and prepare basic financial statements for not-for-profit health care providers
F.      Describe other accounting issues in the health care industry:

        1.      Budgeting and costs
        2.      Auditing
        3.      Taxation and regulation
        4.      Prepaid health care services
        5.      Continuing care retirement communities

G.    Explain financial and operational analysis of health care organizations

XIII.       Auditing of Governmental and Not-for-Profit Organizations

A.    Explain the essential characteristics of financial audits by independent CPAs

        1.      The objective(s) of financial audits
        2.      The source and content of generally accepted auditing standards(GAAS)
        3.      The types of audit reports that can be rendered
        4.      The contents of an unqualified and qualified audit report
        5.      Materiality
        6.      Required supplementary information

B.     Explain what is meant by generally accepted government auditing standards

                  (GAGAS), the source of GAGAS, and why GAGAS are much broader than GAAS

C.     Explain the types of audits performed under GAGAS, including

        1.      Financial audits
        2.      Attestation audits
        3.      Performance audits

D.    Explain the characteristics of a single audit, including:

       1.      The purpose
       2.      Which entities must have a single audit
       3.      What audit work is required
       4.      How major programs are selected for audit
       5.      What reports must be rendered, when, and to whom

E.     Describe the role of audit committee and implications of SOX.

Recommended Teaching Methodology

This course will be structured in such a way as to facilitate the use of different methods of instruction. Students are expected to take an active role in their learning experience and will be expected to have read the assigned material prior to class and to have prepared all written assignments.   Classroom time will consist of one or all of the following: lecture, question and answer, group discussions and class exercises and problems. Work may be done individually or in small groups. 

The readings will come from the required text. Lectures and discussions will enable the Professor and the students to expand on and clarify the material presented in the readings. 

Recommended Assessment Measures

The assessment measures will be the projects assigned and the examinations given. Projects may include actually interviewing or visiting a business.

Use of Calculators/Electronic Devices

The Accounting Department policy regarding programmable calculators requires students in to bring a simple four-function calculator without memories to use on exams.  This policy is in place in order to reduce the likelihood of cheating. All personal electronic devices (including cell phones) must be stored during class.

Statement of Expectations

This course is an elective major course. Students are expected to take an active role in their learning experience and will be expected to have read the assigned material prior to class and to have prepared any written assignments.   Students should attend and actively participate in all classes.

Most of the learning will not take place in the classroom. Students should be informed that most learning occurs as they are doing the required work outside of class. This includes their reading, critically thinking, and applying the concepts to the real world on projects, problems and exercises. The amount that they learn and the level of skill that they develop will be directly proportional to the amount of effort they put forth in preparing for class.

The concept of academic integrity lies at the very heart of any college. This is particularly true of Siena with its strong Franciscan tradition and its dedication to fostering sound moral growth. In such an environment, academic dishonesty cannot be tolerated.    Work that students submit for this course must be entirely done on their own. Although students are encouraged to study together, they are required to produce their own solutions to all work they submit (including, obviously, exams and projects). In any situation in which a student is unsure what constitutes academic dishonesty, it is the student’s responsibility to raise the question with his or her instructor. It is also the student’s responsibility to be familiar with the student guidelines on academic dishonesty, “ Academic Integrity and the Siena Student”

Course Prerequisites 

This course assumes successful completion of Intermediate Accounting and a working knowledge of micro computers, including WORD and EXCEL. Additionally students must be comfortable with mathematical tools necessary for business. Normally this knowledge would be obtained by completing QBUS 100 -Mathematics for Decision Making I.   The student must be able to communicate effectively and be able to work in groups. 

Institutional Mechanism for Providing Feedback for Continuous Quality Improvement

The Accounting department will annually review assessment results from the common questions on the final examination for this course and other assessment projects that might be undertaken. Specifically, assessment results of the learning outcome areas will be analyzed to determine the level of success in achieving these learning outcomes. Any deficiencies in achieving learning outcomes will be addressed and appropriate changes designed to improve the success in achieving these learning outcomes will be implemented.

There also will be a periodic review of the course curriculum to accommodate changes in accounting practice or classroom experience.