MILLER GAAP FOR NOT-FOR-PROFIT
ORGANIZATIONS

By Mary F. Foster, CPA, Howard Becker, CPA,
and Richard J. Terrano, CPA

Harcourt Brace Professional Publishing, 445 pages

Review by John F. Burke, CPA, The CPA Journal

Much has been going on in the not-for-profit accounting world over the past several years. The FASB has issued statements specifically addressed to it including SFAS No. 116, Accounting for Contributions Received and Contributions Made; SFAS No. 117, Financial Statements of Not-for-Profit Organizations; and SFAS No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations. The AICPA is in the process of issuing two audit and accounting guides, Not-for-Profit Organizations and Health Care Organizations. These guides will replace the present guides used for not-for-profit organizations. Once the dust settles, there will be a completely different accounting environment for these institutions. Obviously, new guidance is needed in this area and this book fills the void. It also goes beyond GAAP by covering tax and regulatory reporting.

The book has four sections: introduction and background, accounting for not-for-profit organizations, external financial reporting, and regulatory financial reporting. It begins with an apparent Miller standard format of a cross reference of original pronouncements to the page numbers in the publication. It contains two appendices, sample financial statements in a net asset class model, and a fund-accounting model.

The introductory section provides a definition of a not-for-profit organization as well as an overview of all current pronouncements from the FASB and AICPA that impact not-for-profit organizations, including those that largely have been superseded such as SOP 78-10. It also covers the two proposed guides as well as the proposed SOP on accounting for joint costs.

The second section on accounting contains chapters on revenues, expenses, assets, liabilities, and organizational issues. The chapters on expenses cover operating vs. nonoperating expenses as well as functional expenses. Organizational issues cover segments, discontinued operations, consolidations (including the proposed SFAS), and business combinations.

External financial reporting contains an explanation of the net asset class model required by SFAS No. 117. In addition to the discussion on the requirements of the basic financial statements, it includes chapters on note disclosures, cash flows, and certain GAAP transactions such as extraordinary items. It also has a chapter on service efforts and accomplishments.

The last section on regulatory financial reporting covers tax reporting requirements, payroll and miscellaneous requirements, the Office of Management and Budget (OMB), and cost accounting standards. Tax reporting requirements contain an explanation of IRC Sec. 501, related filing requirements, and unrelated business income. It includes a short explanation of the tax requirements for each of the states. The section on payroll and miscellaneous requirements covers normal payroll requirements, substantiation requirements for gifts, tax-exempt bonds, and lobbying disclosures and reporting. The chapter on OMB covers the agency's various circulars such as A-133, the Department of Labor Guide, auditing considerations, as well as a comparison of GAAS vs. GAS. The final chapter on cost accounting standards covers standards 401 through 420 and a proposed standard and statement.

The book includes a self-study course where, for the additional cost of $59, the reader one can earn 10 hours of CPE. The test is a true/false multiple choice type.

My one quibble with the book is the redundancy in GAAP material that is built in by the way the material is presented. Much of the material covered in the overview of current pronouncements is repeated in the accounting and external financial reporting sections. In at least one case, the discussion on SFAS No. 124, the material is almost word for word. It might make more sense to have the coverage on current pronouncements as an additional appendix. A person reading the book cover to cover would read the necessary coverage in its logical order and then could make a decision whether it was necessary to read an explanation of the original pronouncement.

Overall, the book accomplishes what it sets out to do and would be a valuable tool for anyone interested in the not-for-profit industry. The authors promise the book will be updated periodically as new pronouncements are issued. *