Nonprofit Audits

Objectives of Nonprofit Accounting and Financial Reporting

The objective of financial reporting for nonprofit organizations are to provide information to current and potential resource providers and others in assessing (a) the services a nonprofit organization provides and its ability to provide those services and (b) how management has discharged its stewardship responsibilities, as well as providing information about (c) the organizationís economic resources, obligations, and net resources and (d) the effects of transactions, events, and circumstances that change those resources (that is, the organizationís performance or service efforts and accomplishments). More specifically, nonprofit financial reporting objectives are to:

These objectives are further refined and expanded in SFAS No. 117. According to SFAS No. 117, paragraph 4, ďthe primary purpose of financial statements is to provide relevant information to meet the common interests of donors, members, creditors, and others who provide resources to not-for-profit organizations.Ē

Groups that are particularly interested in the financial information of a nonprofit organization include the following: