Financial Report Essays

Financial Reporting
STR8 UP is a private sector non-for-profit organization; so according to CPA’s claim, its financial reporting should apply the standards in Part III of the CPA Canada Handbook – Accounting: Accounting Standards for Not-for-Profit Organizations (ASNPO). There are some topics not addressed in Part III, then STR8 UP could apply the relevant standards from Part II of the CPA Canada Handbook - Accounting: Accounting Standards for Private Enterprises (ASPE) (BDO Canada LLP, 2014).
The period of time that NPO’s financial report is normally done quarterly or annually and STR8 UP does it annually. The financial reporting must meet both interests of internal and external stakeholders. The internal financial reporting should present the budget for the coming year, the audited financial statements for the previous year and internal in-year financial statements to report on actual results compared to the budget. For serving the external stakeholders interests, the audited annual financial statements that supported by the annual report are often useful. Also, the Canada Revenue Agency (CRA) requires the NPO to submit an annual filling that includes financial information. As a charitable organization, STR8 UP should file Form T3010 (Chartered Professional Accountants of Canada, 2013). If the funders require, it also should provide report about the use of funds in specific format.
NPOs’ financial statements often include a statement of financial position (balance sheet), a statement of operations (income statement), a statement of changes in net assets and a statement of cash flows and notes (Chartered Professional Accountants Canada, 2014). Comparing to the accounting standards, STR8 UP’s financial statements at March 31, 2014 have some points need to be improved.
Statement of Financial Position
STR8 UP only listed cash in its assets. Assets should include things owned by the NPO or owed to the NPO, such as cash, investments, buildings, vehicles and prepaid expenses (Chartered Professional Accountants of Canada, 2013). Therefore, STR8 UP should also record its inventory of T-shirts & books, prepaid expenses, grants & accounts receivable in the current assets, and list its buildings, furniture, and vehicle in the non-current assets. For STR8 UP’s investments, its short-term investments were classified as cash and cash equivalents, but the long-term investments should be recorded separately in non-current assets. An organization’s assets are often more than its liabilities, and left over would be recorded as net assets (Chartered Professional Accountants of Canada, 2013). STR8 UP recorded it as shareholder’s equity. The net asset may include endowment assets, unrestricted assets, internally restricted assets and investment in capital assets (Chartered Professional Accountants Canada, 2014).
Statement of Operations
In a NPO’s statement of operations, revenues always are classified by the source of funds, such as grants, fundraising events and social enterprise sales (Chartered Professional Accountants of Canada, 2013). STR8 UP has already organized its revenues according to the source of funds. The expenses might be classified by object (e.g., salaries, rent), by function (e.g., administrative, research) or by program if the organization has different programs (Chartered Professional Accountants Canada, 2014). STR8 UP organized it expenses by function, but the expenses should be listed by descending order. STR8 UP should move the Fundraising costs from Cost of sales to Expenses part. The investment income might be recorded in the revenues, and an amortization should be recognized in expense. The Net Income could be changed to the Excess (or Deficiency) of Revenues over Expenses.
Statement of Changes in Net Assets
The statement of changes in net assets should show the changes of endowment assets, unrestricted assets, and internally & externally restricted assets (Chartered Professional Accountants of Canada, 2013). STR8

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