WARREN RUPPEL, CPA, is the Director of Government Services at Marks Paneth & Shron LLP, where he is also a key member of the firm's quality assurance function. He is the author of several Wiley accounting publications, including Not-for-Profit Audit Committee Best Practices, and Wiley GAAP for Governments, as well as CCH's Not-for-Profit Organization Audits. He began his career at KPMG and later joined Deloitte & Touche to specialize in audits of not-for-profit organizations and governments. He has since served as the chief financial officer of an international not-for-profit organization and, most recently, was the assistant comptroller for accounting of the City of New York where he was responsible for the City's accounting and financial reporting. He has also served as chair of the audit commitee of the New York State Society of CPAs.

• Preface ixChapter 1 Understanding the Basics of Not-for-Profit Accounting 1What Are Generally Accepted Accounting Principles? 1Why Is Preparing GAAP Financial Statements Important? 2Definitions and Examples of Assets, Liabilities, Reve nues, and Expenses Usually Found in Not-for-Profit Organizations’ Financial Statements 6What Is Meant by the Accrual Basis of Accounting? How Does This Differ from the Cash Basis of Ac- counting, and Which Is Better? 36What Happened to Fund Accounting? 40Summary 42Chapter 2 Basic Financial Statements of a Not-for-profit Organization 43Statement of Financial Position 44Statement of Activities 46Statement of Cash Flows 56Summary 63Chapter 3 Accounting for Contributions 65When Should Contributions Be Recorded? 66Understanding the Impact of Donor Restrictions on the Reporting of Contributions 72Accounting for Contributed Services 74Accounting for Other Noncash Contributions 75Pass-Through Contributions 76Summary 82Chapter 4 Accounting for Investments and Financial Instruments 83Accounting for Investments 84Accounting and Financial Reporting for Financial Instruments 98Summary 107Chapter 5 Accounting for Activities with Joint Costs and Indirect Cost Allocation 109Accounting for the Costs of Activities that Include Fund-Raising 110Allocation Methods 117Indirect Cost Allocation Plans 119Summary 124Chapter 6 Affiliated Organizations 125Affiliated Organizations 126For-Profit Subsidiaries 135Related-Party Disclosures 137Summary 140Chapter 7 Collections 141What Is a Collection? 142Accounting for Collections 143Summary 146Chapter 8 Split-Interest Agreements 147Accounting Fundamentals 148Revocable Split-Interest Agreements 149Irrevocable Split-Interest Agreements 150Examples of Split-Interest Agreements 153Summary 158Chapter 9 Accounting for Pension and Other Postretirement Employee Benefit Plans 159Accounting for Pension Plans 160Determining Pension Expense 164Determining Pension Liability 165Actuarial Assumptions and Calculations 168Required Disclosures 171Deferred Compensation Plans 172Other Postretirement Benefits 173Disclosures 176Summary 177Chapter 10 Lease Accounting Fundamentals 179Lease Accounting 180Operating versus Capital Leases 180Operating Leases 185Operating Leases with Scheduled Rent Increases 187Free Rent Periods 188Capital Leases 189Summary 193Chapter 11 Analyzing the Financial Health of Not-for-Profit Organizations 195Financial Statement Analysis 197Independent Auditor’s Report 197Comparative Financial Statements 201Functional Expense Ratios and Other Analyses 203Budget Considerations in Financial Analysis 213Relation of the Budget to the Financial Statements 214Methods of Budgetary Control 216Summary 218Chapter 12 Current Developments in Not-for-Profit GAAP 221Recent FASB Statements 222Summary 228Index 229

WARREN RUPPEL, CPA, is the Director of Government Services at Marks Paneth & Shron LLP, where he is also a key member of the firm's quality assurance function. He is the author of several Wiley accounting publications, including Not-for-Profit Audit Committee Best Practices, and Wiley GAAP for Governments, as well as CCH's Not-for-Profit Organization Audits. He began his career at KPMG and later joined Deloitte & Touche to specialize in audits of not-for-profit organizations and governments. He has since served as the chief financial officer of an international not-for-profit organization and, most recently, was the assistant comptroller for accounting of the City of New York where he was responsible for the City's accounting and financial reporting. He has also served as chair of the audit commitee of the New York State Society of CPAs.

• Preface ixChapter 1 Understanding the Basics of Not-for-Profit Accounting 1What Are Generally Accepted Accounting Principles? 1Why Is Preparing GAAP Financial Statements Important? 2Definitions and Examples of Assets, Liabilities, Reve nues, and Expenses Usually Found in Not-for-Profit Organizations’ Financial Statements 6What Is Meant by the Accrual Basis of Accounting? How Does This Differ from the Cash Basis of Ac- counting, and Which Is Better? 36What Happened to Fund Accounting? 40Summary 42Chapter 2 Basic Financial Statements of a Not-for-profit Organization 43Statement of Financial Position 44Statement of Activities 46Statement of Cash Flows 56Summary 63Chapter 3 Accounting for Contributions 65When Should Contributions Be Recorded? 66Understanding the Impact of Donor Restrictions on the Reporting of Contributions 72Accounting for Contributed Services 74Accounting for Other Noncash Contributions 75Pass-Through Contributions 76Summary 82Chapter 4 Accounting for Investments and Financial Instruments 83Accounting for Investments 84Accounting and Financial Reporting for Financial Instruments 98Summary 107Chapter 5 Accounting for Activities with Joint Costs and Indirect Cost Allocation 109Accounting for the Costs of Activities that Include Fund-Raising 110Allocation Methods 117Indirect Cost Allocation Plans 119Summary 124Chapter 6 Affiliated Organizations 125Affiliated Organizations 126For-Profit Subsidiaries 135Related-Party Disclosures 137Summary 140Chapter 7 Collections 141What Is a Collection? 142Accounting for Collections 143Summary 146Chapter 8 Split-Interest Agreements 147Accounting Fundamentals 148Revocable Split-Interest Agreements 149Irrevocable Split-Interest Agreements 150Examples of Split-Interest Agreements 153Summary 158Chapter 9 Accounting for Pension and Other Postretirement Employee Benefit Plans 159Accounting for Pension Plans 160Determining Pension Expense 164Determining Pension Liability 165Actuarial Assumptions and Calculations 168Required Disclosures 171Deferred Compensation Plans 172Other Postretirement Benefits 173Disclosures 176Summary 177Chapter 10 Lease Accounting Fundamentals 179Lease Accounting 180Operating versus Capital Leases 180Operating Leases 185Operating Leases with Scheduled Rent Increases 187Free Rent Periods 188Capital Leases 189Summary 193Chapter 11 Analyzing the Financial Health of Not-for-Profit Organizations 195Financial Statement Analysis 197Independent Auditor’s Report 197Comparative Financial Statements 201Functional Expense Ratios and Other Analyses 203Budget Considerations in Financial Analysis 213Relation of the Budget to the Financial Statements 214Methods of Budgetary Control 216Summary 218Chapter 12 Current Developments in Not-for-Profit GAAP 221Recent FASB Statements 222Summary 228Index 229

WARREN RUPPEL, CPA, is the Director of Government Services at Marks Paneth & Shron LLP, where he is also a key member of the firm's quality assurance function. He is the author of several Wiley accounting publications, including Not-for-Profit Audit Committee Best Practices, and Wiley GAAP for Governments, as well as CCH's Not-for-Profit Organization Audits. He began his career at KPMG and later joined Deloitte & Touche to specialize in audits of not-for-profit organizations and governments. He has since served as the chief financial officer of an international not-for-profit organization and, most recently, was the assistant comptroller for accounting of the City of New York where he was responsible for the City's accounting and financial reporting. He has also served as chair of the audit commitee of the New York State Society of CPAs.

• Preface ixChapter 1 Understanding the Basics of Not-for-Profit Accounting 1What Are Generally Accepted Accounting Principles? 1Why Is Preparing GAAP Financial Statements Important? 2Definitions and Examples of Assets, Liabilities, Reve nues, and Expenses Usually Found in Not-for-Profit Organizations’ Financial Statements 6What Is Meant by the Accrual Basis of Accounting? How Does This Differ from the Cash Basis of Ac- counting, and Which Is Better? 36What Happened to Fund Accounting? 40Summary 42Chapter 2 Basic Financial Statements of a Not-for-profit Organization 43Statement of Financial Position 44Statement of Activities 46Statement of Cash Flows 56Summary 63Chapter 3 Accounting for Contributions 65When Should Contributions Be Recorded? 66Understanding the Impact of Donor Restrictions on the Reporting of Contributions 72Accounting for Contributed Services 74Accounting for Other Noncash Contributions 75Pass-Through Contributions 76Summary 82Chapter 4 Accounting for Investments and Financial Instruments 83Accounting for Investments 84Accounting and Financial Reporting for Financial Instruments 98Summary 107Chapter 5 Accounting for Activities with Joint Costs and Indirect Cost Allocation 109Accounting for the Costs of Activities that Include Fund-Raising 110Allocation Methods 117Indirect Cost Allocation Plans 119Summary 124Chapter 6 Affiliated Organizations 125Affiliated Organizations 126For-Profit Subsidiaries 135Related-Party Disclosures 137Summary 140Chapter 7 Collections 141What Is a Collection? 142Accounting for Collections 143Summary 146Chapter 8 Split-Interest Agreements 147Accounting Fundamentals 148Revocable Split-Interest Agreements 149Irrevocable Split-Interest Agreements 150Examples of Split-Interest Agreements 153Summary 158Chapter 9 Accounting for Pension and Other Postretirement Employee Benefit Plans 159Accounting for Pension Plans 160Determining Pension Expense 164Determining Pension Liability 165Actuarial Assumptions and Calculations 168Required Disclosures 171Deferred Compensation Plans 172Other Postretirement Benefits 173Disclosures 176Summary 177Chapter 10 Lease Accounting Fundamentals 179Lease Accounting 180Operating versus Capital Leases 180Operating Leases 185Operating Leases with Scheduled Rent Increases 187Free Rent Periods 188Capital Leases 189Summary 193Chapter 11 Analyzing the Financial Health of Not-for-Profit Organizations 195Financial Statement Analysis 197Independent Auditor’s Report 197Comparative Financial Statements 201Functional Expense Ratios and Other Analyses 203Budget Considerations in Financial Analysis 213Relation of the Budget to the Financial Statements 214Methods of Budgetary Control 216Summary 218Chapter 12 Current Developments in Not-for-Profit GAAP 221Recent FASB Statements 222Summary 228Index 229