Differences of Accounting for Government & Nonprofit organization versus for profit business.
Business accounting has always been considered by some people to be the model for government accounting. But there are differences between one and another. Government and not for profit are governed mainly by their budgets. The budget covers the governmental decisions on how to raise money and where to spend it. Traditionally the budget takes center stage and one of the most public decisions in the government. They may have several budgets for the different funds in government and may be backed by the force of law. Nonprofit accounting is guided by FASB Statement of Financial Accounting Standards Nos. 116 and 117. Nonprofits usually don't have a revenue stream similar to that of a for-profit business, which gets funds through the selling of goods or services. Instead, a nonprofit receives donations and government and foundation grants. Unlike a for-profit, a nonprofit often needs to report on funds received. For example, if an organization gets federal funding, it must report on how the money was spent and it must comply with various rules. This can get very complex, which is why you may see specialized accountants in large nonprofits who are experts in certain funding sources. One of the main differences between the GASB and the FASB is that the GASB is intended to keep and improve upon the current standards put in place for governmental accounting purposes; while the FASB, on the other hand, is intended to maintain a level of financial reporting deemed useful by stakeholders of publically traded and privately owned companies. Another difference is the general audience for which each accounting standard is intended for. For example, the GASB is mainly to report activity to the general public; while the FASB is to report activity to shareholders, vendors, and even the SEC if a publically traded company. For-profit companies typically have a...
Please join StudyMode to read the full document