Importance of Accounting to Non Profit Making Business
Chapter One
OBJECTIVE OF THE STUDY
Noted hereunder are specific objectives, which the project is designed to achieve:
- To find out the impacts of accounting to nonprofit making organization.
- To find out importance of accounting information to the church
- To see how accounting information could b e applied in the church
- To identity the problem created when accounting information is not used in the church
- To find out the problem associated with unqualified hand handling accounting information.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
ACCOUNTING FOR NONPROFIT ORGANIZATION
A nonprofit organization (abbreviated NPO, also not-for-profit) is an organization that provides assistance to individuals, groups or causes, rather than generating profits for itself. There are a wide range of NPOs: Charities, churches, hospitals, schools, as well as associations with purposes of science, literature, arts, sports, wildlife protection, etc. In most countries, governments and government agencies are considered a separate type of organization and not counted as NPOs.
PRINCIPAL DIFFERENCES BETWEEN COMMERCIAL ORGANIZATIONS AND NPOS
One of the principal differences between commercial organizations and NPOs is that they have different reasons for their existence. While commercial organizations pursue business profits in market transactions and distribute earnings to shareholders, the NPOs pursue public benefits and provide programs and services which are often not provided otherwise. As for NPOs, which are not market oriented, assets are contributed by voluntary funds or governmental grants, which usually have restrictions on the usage, but without expectation of repayment or economic return. In most cases, NPOs are exempted from taxes due to their contributions to social needs.
ACCOUNTING DISTINCTIONS BETWEEN COMMERCIAL ORGANIZATIONS AND NPOS
There are accounting distinctions in five significant areas between commercial organizations and NPOs, which partly stem from their different objectives. In commercial organizations, the objective is to match revenue and costs to measure profitability, while in NPOs, accountability for program activities and stewardship is the objective. As Henke (1983) says, „Financial reports for nonprofit organizations should reflect the service story of the entity, rather than net income or net loss realized by the entity. In sharp contrast, accounting reports for profit enterprises must emphasize the extent of achievement of the profit objective and the ability of the entity to support itself.
ANTHONY’S ARGUMENTATION (1980) ON NPO
Anthony points out that there are two worlds of accounting in the US after 1920s: one accounting world for business organizations and another accounting world for NPOs. Before that, “nonbusiness accounting was approximately the same as business accounting”. (Anthony, 1980, p.84) The reasons for the emergence of the accounting world for NPOs are as follows: “First, NPOs, by definition, do not exist to earn a profit and it is therefore argued that they should not use business accounting principles, which are focused on the measurement of profitability. Second, managers of NPOs must adhere to restrictions on spending – either legal, such as those set forth in the approved budget of a governmental unit, or other limitations specified by donors or grantors – and it is argued that the purpose of accounting should therefore be to ensure compliance with these restrictions.” (Anthony, 1980, p.86) In his view, the basic purpose of NPOs is to provide services, so their success should be measured by how much services they provide with the resources available, which is impractical in most NPOs. However, Anthony does not agree that the reasons are sufficient for the differences in the two accounting worlds: “Expenses in a NPOs are essentially the same as those in a business; in both cases, they represent the resources used in an accounting period, that is the material, labor, and other services consumed in that period. Thus the difference in the meaning of the operating statement relates solely to revenues.”
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to importance of accounting to nonprofit making business.
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on importance of accounting to nonprofit making business. 200 members of selected churches in Akunanaw, Isiagu local government of Enugu state randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain importance of accounting to nonprofit making business
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of importance of accounting to nonprofit making business
Summary
This study aimed at having a critical analysis of importance of accounting to nonprofit making business. Five objectives were raised which included: To find out the impacts of accounting to nonprofit making organization, to find out importance of accounting information to the church, to see how accounting information could b e applied in the church, to identity the problem created when accounting information is not used in the church, to find out the problem associated with unqualified hand handling accounting information. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 members of selected churches in Awkunawna, in Isiagu local government of Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource cashiers, elders, brothers and sisters were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Following the typology by Hausmann (1980), Tampere Short Film Association is a donative nonprofit while it receives most of its income in the form of grants. More precisely, it s a mutual non-profit, while being controlled by the main funder, the city of Tampere. The network approach enabled the researcher to identify different actors, resources and activities in the development process of the case organisation and its stakeholder nets. The audiences introduced by Hill et al (1997) are relevant also for the case organisation. However, the international nature of the service (event) provided by TFF adds another level of networks to the complexity of the activity context of the case company. Commercialisation of non-profit organizations as a concept is not well defined in the theory. On the basis of this study I would define it as a strategic process of developing an organisation’s mission into products and services (productising?), marketing and management of stakeholder relations and relationships, both internal and external
Recommendation
The researcher hereby recommend that any non profit organization for easy running and genuine of the organization without downfall of the organization financially, they should hire a professional accountant that can handle their financial issues.
REFERENCES
- Commissione Aziende non profit Consiglio Nazionale Dottori Commercialisti (CNDC) (2002), Documento di presentazione di un sistema di rappresentazione di sintesi delle aziende nonprofit, www.cndc.it
- European Commission (1997): Communication on “Promoting the role of voluntary organizations and foundations in Europe”. Office for Official Publications of the European Communities, Luxembourg.
- European Commission (2000): Commission Discussion Paper “The Commission and non-governmental organizations: building a stronger partnership” COM (2000) 11, final, Brussels. 12
- García, S.; Durán, P.; Salazar, S. and Ventura, A. (2005): The limits of convergence between third sector models in the European Union. An analysis of the legal framework for volunteering in the Mediterranean third sector (Italy, Spain and Portugal). Paper presented at ISTR-EMES First European Conference, Paris, April.
- Real Decreto 1643/1990, de 20 de diciembre, por el que se aprueba el Plan General de Contabilidad [General Chart of Accounts]. Real Decreto 776/1998,
- de 30 de abril, por el que se aprueban las normas de adaptación del Plan General de Contabilidad a las entidades sin fines lucrativos y las normas de información presupuestaria de estas entidades [Adaptation of General Chart of Accounts to Nonprofit Entities].
