Based on discussions we have had with CDP participants, we have compiled a list of suggestions to build more detail into your audits or reviews, and provide a clearer financial picture of your organization. Including this information from the beginning will make your Data Profile easier and more seamless to complete. We encourage you to discuss these items with your auditor.
Part 2: The Statement of Activities
Revenue: include columns for each restriction class
We recommend breaking revenue down into separate columns for each restriction class – unrestricted, or without donor restrictions and restricted, or with donor restriction. This provides clear totals for each category, and makes your revenue picture clear at a glance. There are other formats that still adhere to accounting rules, but they leave the reader prone to making accidental omissions from their Data Profile.
Revenue: list types of contributors
Rather than solely listing totals for grants and contributions, it is helpful to break them down by donor type: individuals, corporations, foundations, government, etc. This helps you to understand exactly how revenue flowed into your organization over the course of the year, and provides a clear comparison for internal records.
Revenue: distinguish operating from non-operating
Boards, funders, researchers, and advocates are increasingly concerned with capitalization: how well-equipped your organization is to meet future financial needs. A good first step to thinking about capitalization is to examine revenue in terms of its intended use - operating or non-operating. Operating revenue is intended to cover all ordinary, mission-related expenses, including direct programming expenses and the costs of running your business. Non-operating revenue is a one-time infusion of revenue that the organization cannot necessarily count on receiving ever year, such as a bequest, revenue intended to cover capital purchases of facilities or other fixed assets; donations to a reserve fund; or growth/risk capital, etc.. Discuss with your auditor how to show these types of revenue, to help distinguish your day-to-day operating picture from your total financial picture.
Expenses: group them by functional category
According to accounting rules, a Statement of Activities must break down expenses into functional categories of program, fundraising, and general & administrative. Even if your audit includes a list of natural expenses such as salaries, rent, utilities, etc., it should also clearly contain the totals for each functional grouping on the statement itself, or include them in an audit footnote.
For more suggestions on improving your audit’s usability, see the related articles:
