Academic journal article Journal of Accountancy

Charities Tread Lightly with New Statement

Academic journal article Journal of Accountancy

Charities Tread Lightly with New Statement

Article excerpt

A new, stricter Statement of Position, Aaccounting for Costs of Activities of Not-for-Profit Organizations and State and Local Governmental Entities That Include Fund Raising, is already arousing the ire of not-for-profit organizations. Although the SOP, issued by the American Institute of CPAs accounting standards executive committee, hasn't taken effect yet, some are offering gloomy predictions on what the statement will do to charities' financial statements. (For details, see "AcSEC Becomes Strict on Fundraising" and "New Role for NPO CPAs," jofA, May97, page 14.)

"Implementing this SOP will be like walking through a minefield," said Robert H. Frank, CPA. Frank's firm, Frank & Co., P.C., in McLean, Virginia, has a lot of NPO clients that he handles personally. He also sits on the board of directors of the D.C.-based National Federation of Nonprofits (NFN), an advocacy organization in postal, regulatory, legislative and accountability issues for its 400 members. The NFN wrote a protest letter to Securities and Exchange Commission Chairman Arthur Levitt, Jr., shortly after the statement was approved, complaining about a number of issues in the statement.

"Any affected organization will require a lot of CPA help to navigate the new standard," Frank continued. "NPOs will not need just a CPA -- they'll need one very knowledgeable in cost allocations and NPO fundraising and multipurpose costs -- a real specialist" He said that, personally, he should be thrilled with the new standard because "it will generate consulting work. …

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