Financial Reporting Review of a Not-for-Profit Organization

Financial Reporting Review of a Not-For-Profit Organization
Author
Affiliation
Course
Instructor
Due Date
Financial Reporting Review of a Not-For-Profit Organization
The Human Rights Campaign (HCR) is a popular not-for-profit organization that advocates for all people's equality, particularly the lesbian, gay, bisexual, transgender, and queer (LGBTQ) community. The Financial Accounting Standards Board (FASB) calls upon such organizations to disclose qualitative information on their management of available resources and particularly those that are meant to meet short-term obligations for that financial period. In its 2020 annual report, HRC proceeds to provide concerned stakeholders with the different sources of their revenue and support and, equally important, the organization’s expenses for the year.
Onwards, FASB standards demand that related organizations provide financial information in the clearest manner possible, which means that even the three fundamental types of funds will have to be reported. These funds are unrestricted, temporarily restricted, and permanently banned funds. Most HRC's assets are either classified as 'without donor restrictions' and 'with donor restrictions, meaning that the three types of funds could be widely applicable in the organization’s operations. Member contributions constitute the most significant source of revenue, accounting for 40.8% of income. Federal Club members and special events come second and third with 25.2% and 17.87% (Human Rights Campaign, 2020). All of these incomes are without donor restrictions.
Stakeholders at HRC will be keen on ensuring that the organization serves its purposes well and reaches its utmost pinnacle in its performance. Since not-for-profits do not provide commercial products, at least that is not their purpose, finances are a significant focus. Stakeholders will be concerned with the organization's ability to raise a considerable amount of income even if it is insufficient to run its operations. Receivables from special events, consumer marketing, and investment income would guarantee the organization's going concerned even if the future became tumultuous because of unprecedented circumstances. The second finance aspect stakeholders would be involved with would be the organization's program services. These actions show that the organization is doing much beyond mere publicity to impact change in the community.
The primary goal in analyzing a not-for-profit organization's cash flows is to determine its cash position. This step is conducted to enhance the organization’s liquidity levels and, more importantly, reduce the frequency of cash crunches. Cash flow emanates from three distinct areas, which are operating, investing, and financing activities. Currently, cash flow from operating activities ap...