Old-earth geology and the Great Rift Valley's implications for life

Leadership & Fiscal Responsibility

The first two chapters of Financial and Accounting Guide for Not-For-Profit Organizations, authored by Gross et al., explicitly relates to the financial practices that pertain to not-for-profit entities. Although many of the basic fundamental principles of these organizations are the same as those which are for profit, these chapters emphasize several facets of accounting that specifically pertain to the former. As such, it is interesting to note the way that these two chapters are structured and related to one another. The first chapter, "Responsibilities for Fiscal Management," denotes an overview of the practices that the financial manager (which is referred to within the text as a "treasurer") (Gross et al., 2008, p. 6) should undertake to keep a non-profit financially healthy. The second chapter flushes out this basic outline with many salient details that are pivotal to operations.

The basic responsibilities that a financial manager is responsible for include the maintenance of records for the organization, the preparation of fiscal statement, creating and implementing a budget, communicating financial matters to the appropriate representative in the company, and complying with regulations at both the state and the federal levels. All of these processes are intrinsically related with one another; it is advisable, for instance, to base one's budget on one's financial statements (Gross et al., 2008, p. 3 mine) and to implement measures such as financial controls to ensure quality assurance. Of particular interest in effecting financial controls is the proper management of donations to the non-profit. The first chapter concludes with information almost exclusively germane to non-profits, including properly reporting fundraising monies, categories of funds attained by endowments, and reasons for which it is necessary to aggregate reporting with external entities (Gross et al., 2008, p. 12-13) to ensure clarity.

Whereas the first chapter focuses on points of similarity and convergence between not for profit and for profit accounting practices, the second chapter concentrates exclusively on the former. However, it provides key distinctions between these two entities, which includes their missions (non profits are typically created to fulfill a social purpose) and various definitions as to what actually constitutes a non-profit (which pertains to questions of ownership, profitability, and contributions (Gross et al., 2008, p. 19).

Still, there are different accounting practices that non-profit entities can utilize to serve their own specific needs. For instance, they can choose to either employ cash accounting or accrual accounting; the former is only concerned with cash transactions while the latter provides a more holistic overview of funds and resources an organization has taken in and owes to others. Typically, smaller non-profits use cash accounting and larger ones employ accrual accounting (Gross, 2008, p. 20). Additionally, some organizations may choose to leverage fund accounting, which distinguishes financial affairs by their usage and donor limitation. This practice provides an extra degree of specificity which is useful.