Financial Reporting and Filing for Nonprofit Organizations

School: Southern New Hampshire University - Course: ACC 325 - Subject: Accounting

Southern New Hampshire University ACC 325 | Accounting for Nonprofit Organizations Milestone Two: Reporting & Filing

II. Reporting and Filing Financial Reporting Financial reports are prepared for both internal and external use. The reports prepared for internal use tend to be more detailed because they need to provide management with enough details to make decisions about the organization. External financial reports are used more to provide information surrounding the financial health of an organization to the public(CFI Team 2022). Nonprofit organizations are required to follow the reporting standards set forth by the Financial Accounting Standards Board. This requires that they must produce the following financial statements: Statement of Financial Position, Statement of Activities, and Statement of Cash Flows (Copley 2020). The Statement of Financial Position reports assets, liabilities, and net assets, with the net assets being separated as with or without donor restrictions. The Statement of Activities reports revenues, expenses, gains, and losses. There are also specific disclosures required for nonprofits. Additional disclosures typically include Notes to the Financial Statements and a Schedule of Functional Expenses (Copley 2020). It's also important to tailor the reports for the intended audience. As an example, the various facts and figures that are easy for an accountant to understand may be more difficult for the layperson to follow, in which case a chart that breaks down the information or a summary may be more beneficial. In Maine, nonprofits are required to expend grant and donor funds in a manner that corresponds with the donors' wishes and requirements. This must happen in accordance with the Maine Uniform Prudent Management of Institutional Funds Act (). As such, the organization's financial system must support the ability to segregate funds to properly track the expenses of

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grants and donations. Annual Filing Requirements Nonprofits must meet both federal and state requirements for public disclosures. To maintain nonprofit status, the federal tax reporting and legal filing requirement can befulfilled with Form 990, 990-EZ, or 990-PF. This can be submitted on the IRS website. Legally, a nonprofit is required to provide a copy of their Form 1023, which recognizes their designation as a 501(c)(3), as well as the previous three years of Form 990 (IRS n.d.). In addition to this, the organization is required to fulfill applicable state requirements in order to maintain their federal nonprofit status. The state of Maine requires that the NPO files the Annual Return Form 990 to the IRS. Additionally, the Secretary of State requires that Form MNPCA-13, or the Annual Report, is filed between January 1 and June 1 of each year. This is accompanied by a $35 filing fee. Maine also requires that the organization submit the Charitable Organization Registration form, annually by November 30th, to the Maine Office of Professional & Occupational Regulation. This is accompanied by a fundraising report and a $25 filing fee (Hurwit & Associates n.d.). If the nonprofit organization had any changes to their Articles of Incorporation, they must also file a Restated Articles of Incorporation, or form MNPCA-6A (D) to the Secretary of State with a minimum fee of $10.00.