A method to promote Transparency and Usefulness | Essay 2. 1 of NonProfit Organization’s Accounting Information A Method to promote Transparency and Usefulness of NonProfit Organization’s Accounting Information (2) - Prototyping and Outcome Analysis of Revised Accounting Information for Development & Welfare NonProfit Organizations (DWNPO) - Author Woo, Mi Hyang (PhD. course completed, Department of Accounting, Soongsil University) Roh, Hee Chun (PhD. Assistant Professor, Department of Accounting, Soongsil University) Abstraction As our country is expanding its social welfare policy while raising its global presence, nonprofit organizations’ social function and role become more significant, but their lack of transparency in financial management and accounting and weakness of internal governance control structure make them into the failure in secure of confidence and proper evaluation. NonProfit organizations in Korea currently face a number of issues concerning accounting, corporate governance and auditing practices. To help this problem, a study on “Method to promote transparency and usefulness of nonprofit organizations’ accounting information” is being actively done so that nonprofit organizations can rebuild the confidential relationship and create the healthy donation culture for vitalization of public service. Most existing studies emphasize the aspects of accounting standards and legal system over nonprofit organizations to just tell about macroscopic analysis and examination result, but practically each of nonprofit organizations such as educational foundations, medical corporations, religious and culture corporations, mutual saving and finance companies, etc. has its own accounting treatment standard and therefore, a study for integration into one accounting treatment standard makes us worry about its practical applicability. The essay (1) analyzes the contents of complicated services which are performed by development & welfare nonprofit organizations such as Good Neighbors International, World Vision, etc. and explains reason (limits) why the existing financial accounting rules of social welfare foundations and organizations cannot be applicable any longer and suggests a solution that promotes transparency of accounting information. The essay (2) develops the prototype of accounting information revised and analyses the feedback of adoption of it. To develop the user-oriented revised accounting information for DWNPO, the modified waterfall model with feedback and prototyping is selected as development methodology and one additional branch for the training and workshops is added into defining user requirements process. The outcomes of this study confirm that the significant effect on financial accounting standards, fund accounting, functional accounting and divisionalized accounting (called ‘3FD’) applied to NPO’s accounting and financial reports. This study provides to GNI to integrate all CDPs accounting and financial reporting accurately, to keep accounting transparency, to meet international accounting standards, and to build credibility from information users. Key words: NonProfit, DWNPO, Fund Accounting, Functional Accounting, Divisionalized Accounting,
Transcript
A method to promote Transparency and Usefulness | Essay 2. 1 of NonProfit Organization’s Accounting Information
A Method to promote Transparency and Usefulness of NonProfit Organization’s Accounting Information (2)
- Prototyping and Outcome Analysis of Revised Accounting Information for Development & Welfare NonProfit Organizations (DWNPO) -
Author Woo, Mi Hyang (PhD. course completed, Department of Accounting, Soongsil University) Roh, Hee Chun (PhD. Assistant Professor, Department of Accounting, Soongsil University)
Abstraction As our country is expanding its social welfare policy while raising its global presence, nonprofit organizations’ social function and role become more significant, but their lack of transparency in financial management and accounting and weakness of internal governance control structure make them into the failure in secure of confidence and proper evaluation. NonProfit organizations in Korea currently face a number of issues concerning accounting, corporate governance and auditing practices.
To help this problem, a study on “Method to promote transparency and usefulness of nonprofit organizations’ accounting information” is being actively done so that nonprofit organizations can rebuild the confidential relationship and create the healthy donation culture for vitalization of public service.
Most existing studies emphasize the aspects of accounting standards and legal system over nonprofit organizations to just tell about macroscopic analysis and examination result, but practically each of nonprofit organizations such as educational foundations, medical corporations, religious and culture corporations, mutual saving and finance companies, etc. has its own accounting treatment standard and therefore, a study for integration into one accounting treatment standard makes us worry about its practical applicability.
The essay (1) analyzes the contents of complicated services which are performed by development & welfare nonprofit organizations such as Good Neighbors International, World Vision, etc. and explains reason (limits) why the existing financial accounting rules of social welfare foundations and organizations cannot be applicable any longer and suggests a solution that promotes transparency of accounting information.
The essay (2) develops the prototype of accounting information revised and analyses the feedback of adoption of it. To develop the user-oriented revised accounting information for DWNPO, the modified waterfall model with feedback and prototyping is selected as development methodology and one additional branch for the training and workshops is added into defining user requirements process.
The outcomes of this study confirm that the significant effect on financial accounting standards, fund accounting, functional accounting and divisionalized accounting (called ‘3FD’) applied to NPO’s accounting and financial reports. This study provides to GNI to integrate all CDPs accounting and financial reporting accurately, to keep accounting transparency, to meet international accounting standards, and to build credibility from information users.
Key words: NonProfit, DWNPO, Fund Accounting, Functional Accounting, Divisionalized Accounting,
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1 Introduction
1.1 Review of the 1st Working Paper
“Requirements analysis to develop EDP accounting system for Development & Welfare Nonprofit Organizations (DWNPO)” Following subjects has been studied at the 1st working paper;
Classification of the development and welfare nonprofit organizations (DWNPO):
Korean DWNPO has unique characteristic providing complex charitable services in multiple nations and differs from the regular NPOs in abroad which serve one or two specific programs in small number of countries.
Reviewing Accounting Standard for DWNPO:
Current Korean accounting regulation for nonprofit organizations is varying according to the function of nonprofit organizations and the authority ruling the organizations. Recently Korea Accounting Institute (KAI, Korea Accounting Standard Board (KASB)) prepared and announced the unified accounting standard which is to be applied to all kinds of Korean nonprofit organizations like as FASB ASC 905 in the United States.
KAI’s new accounting standard is suitable to DWNPO who has its affiliated entities and/or project teams serving in numerous countries and follows local accounting standard different from current Korean standard.
Requirement Analysis and adding Fund, Functional, and Divisionalized Accounting concepts to Financial Accounting for DWNPO Accounting Information:
The case study has been conducted in cooperation with Good Neighbors International (GNI) and the requirements are collected from GNI’s Integrated Accounting Project Task Team and the organization’s affiliated entities and project teams widely spread in about 25 foreign countries through continuous interviews and workshops during the project. The requirements have been analyzed carefully and it is derived that following various accounting concepts have to be applied to handle DWNPO’s activities.
ž Account (Unified Chart of Accounts) | Financial Accounting
ž Fund | Fund Accounting
ž Program | Functional Accounting
ž Entity | Divisional Accounting
ž Other Requirements: Planning & Budgeting, Internal Transactions, Multiple Currencies, Various Taxation System, In-Kind Transactions, Inventory Managements, etc.
1.2 Preview of the 2nd Working Paper
In this 2nd working paper “Prototype of Revised Accounting Information for Development & Welfare NonProfit Organizations (DWNPO)”, accounting process and reports of Good Neighbors International (GNI) has been reviewed as well as the code list which is used as a chart of accounts. One of largest DWNPO, World Vision Korea (WVK), is also using Excel-based accounting format in the local project team even though they have ERP system in the headquarters, same as GNI. The financial reports requested by KOICA as one of contributors was considered also in designing reports for external stakeholders.
The database is designed to accomplish the functional, fund, and divisionalized accounting features in addition to regular financial accounting, which had been inferred from previous study.
User interface is also designed similarly to the printed forms or vouchers normally used in practice to provide intuitive look to the users.
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The prototype of accounting information revised is deployed to about 220 project teams of GNI in around 32 countries and the financial data of each project team is aggregated by each country’s Head Office, Regional Office and International Headquarter gradationally.
To get the feedback on the prototype accounting information revised from the users, started the survey with the questionnaire attached in Survey.
The objectives of the survey were to evaluate the results of recommendation executed, the effects of a revised accounting information and the parts and the cause of the terms of the improvements.
Following features are added to the regular financial accounting algorithm especially for DWNPO;
§ Build Unified Chart of Accounts (Characteristic Accounts)
§ Keep default Unit information on each client version to follow up the transactions of each Divisional accounting information
§ Add columns for Fund and Program in transaction line to track the Fund and Functional information
§ Currency and its exchange rate information for foreign currency transaction recording
Following requirements are postponed to next upgrade project to minimize impact to the accountant who has been using MS Excel in recording transactions.
§ In-Kind Transactions
§ Inventory Managements
2. Design Accounting Information Revised
2.1 Accounting Software Development Methodologies
2.1.1 Software Development Life Cycle (SDLC) A software development methodology or life cycle in software engineering is a framework that is used to structure, plan, and control the process of developing an information system. Common methodologies include waterfall, prototyping, iterative and incremental development, spiral development, rapid application development, and extreme programming.
Waterfall Development
The waterfall model is a sequential development approach, in which development is seen as flowing steadily downwards (like a waterfall) through the phases of requirements analysis, design, implementation, testing (validation), integration, and maintenance. The first formal description of the method is often cited as an article published by Winston W. Royce in 1970 although Royce did not use the term "waterfall" in this article.
The basic principles are:
ž Project is divided into sequential phases, with some overlap and splash back acceptable between phases.
ž Emphasis is on planning, time schedules, target dates, budgets and implementation of an entire system at one time.
ž Tight control is maintained over the life of the project via extensive written documentation, formal reviews, and approval/signoff by the user and information technology management occurring at the end of most phases before beginning the next phase.
The Waterfall model is a traditional engineering approach applied to software engineering. It has been widely blamed for several large-scale government projects running over budget, over time and sometimes failing to deliver on requirements due to the Big Design Up Front approach. Except when
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contractually required, the Waterfall model has been largely superseded by more flexible and versatile methodologies developed specifically for software development.
Prototyping
Software prototyping, is the development approach of activities during software development, the creation of prototypes, i.e., incomplete versions of the software program being developed.
The basic principles are:
ž Not a standalone, complete development methodology, but rather an approach to handle selected parts of a larger, more traditional development methodology (i.e. incremental, spiral, or rapid application development (RAD)).
ž Attempts to reduce inherent project risk by breaking a project into smaller segments and providing more ease-of-change during the development process.
ž User is involved throughout the development process, which increases the likelihood of user acceptance of the final implementation.
ž Small-scale mock-ups of the system are developed following an iterative modification process until the prototype evolves to meet the users’ requirements.
ž While most prototypes are developed with the expectation that they will be discarded, it is possible in some cases to evolve from prototype to working system.
ž A basic understanding of the fundamental business problem is necessary to avoid solving the wrong problem.
Incremental Development
Various methods are acceptable for combining linear and iterative systems development methodologies, with the primary objective of each being to reduce inherent project risk by breaking a project into smaller segments and providing more ease-of-change during the development process.
The basic principles are:
ž A series of mini-Waterfalls are performed, where all phases of the Waterfall are completed for a small part of a system, before proceeding to the next increment, or
ž Overall requirements are defined before proceeding to evolutionary, mini-Waterfall development of individual increments of a system, or
ž The initial software concept, requirements analysis, and design of architecture and system core are defined via Waterfall, followed by iterative Prototyping, which culminates in installing the final prototype, a working system.
Spiral Development
The spiral model is a software development process combining elements of both design and prototyping-in-stages, in an effort to combine advantages of top-down and bottom-up concepts. It is a meta-model, a model that can be used by other models.
The basic principles are:
ž Focus is on risk assessment and on minimizing project risk by breaking a project into smaller segments and providing more ease-of-change during the development process, as well as providing the opportunity to evaluate risks and weigh consideration of project continuation throughout the life cycle.
ž Each cycle involves a progression through the same sequence of steps, for each part of the product and for each of its levels of elaboration, from an overall concept-of-operation document down to the coding of each individual program.
ž Each trip around the spiral traverses four basic quadrants: (1) determine objectives, alternatives, and constraints of the iteration; (2) evaluate alternatives; Identify and resolve risks; (3) develop and verify deliverables from the iteration; and (4) plan the next iteration.
ž Begin each cycle with an identification of stakeholders and their win conditions, and end each
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cycle with review and commitment.
Rapid Application Development
Rapid application development (RAD) is a software development methodology, which involves iterative development and the construction of prototypes. Rapid application development is a term originally used to describe a software development process introduced by James Martin in 1991.
The basic principles are:
ž Key objective is for fast development and delivery of a high quality system at a relatively low investment cost.
ž Attempts to reduce inherent project risk by breaking a project into smaller segments and providing more ease-of-change during the development process.
ž Aims to produce high quality systems quickly, primarily via iterative Prototyping (at any stage of development), active user involvement, and computerized development tools. These tools may include Graphical User Interface (GUI) builders, Computer Aided Software Engineering (CASE) tools, Database Management Systems (DBMS), fourth-generation programming languages, code generators, and object-oriented techniques.
ž Key emphasis is on fulfilling the business need, while technological or engineering excellence is of lesser importance.
ž Project control involves prioritizing development and defining delivery deadlines or “timeboxes”. If the project starts to slip, emphasis is on reducing requirements to fit the timebox, not in increasing the deadline.
ž Generally includes joint application design (JAD), where users are intensely involved in system design, via consensus building in either structured workshops, or electronically facilitated interaction.
ž Active user involvement is imperative.
ž Iteratively produces production software, as opposed to a throwaway prototype.
ž Produces documentation necessary to facilitate future development and maintenance.
ž Standard systems analysis and design methods can be fitted into this framework.
2.1.2 Modified SDLC with Prototyping To develop the user-oriented accounting system for DWNPO, the modified waterfall model with feedback and prototyping is selected as development methodology and one additional branch for the training and workshops is added into defining user requirements process.
Below is an overall diagram of the SDLC using the waterfall model with feedback and prototyping.
[Figure 1] Work Flow Diagram
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The traditional waterfall model (colored in blue) is applicable to the main stream of development for the predefined financial accounting process.
However, as described in chapter 1 Introduction and the 1st working paper, some additional accounting concepts such as functional, fund, and divisionalized accounting are adopted for DWNPO, and the features to handle the non-cash transactions, in-kind-goods/services specific to nonprofit organizations are also required. Each of additional nonprofit specific concepts or features is needed to be modularized in developing the process and algorithm. Grafting the prototyping model (colored in green) as a part of the main developing process is appropriate in developing modular process of which the requirements are not defined clearly and besides getting the quick feedback from the user in developing phase is another merit of prototyping.
Training & Workshops
To derive the requirements for new accounting system from non-accounting-majored users and member of the project team, additional step for training and workshops is grafted onto the requirements analysis phase.
The classes on nonprofit accounting practice are provided for GNI IHQ project team and other management department staffs to help them to prepare new accounting guidelines in accordance with the nonprofit accounting standard based on FASB ASC 905 and define the requirements for the accounting system. During 40 hours classes, most of accounting principles and nonprofit accounting subjects are covered and many practical issues in accounting and managing their international services are discussed as well.
Two workshops are held, one in Malawi for Africa region to which 23 accounting staffs and managers from 9 countries and the other in Korea to which 22 accounting staffs and managers from 12 Asia regional countries and 2 staffs and manager from Guatemala in the Central & Latin America region. Accounting classes and hands-on training for the initial prototype of accounting system are given at both of a-week-long workshops. The interviews with staffs from each country is continued to collect requirements and investigate each country’s taxation system.
The requirements collected through the training and workshops is analyzed and the solution applying fund, functional, and divisionalized accounting concepts is provided as explained in the 1st working paper.
2.2 As-Is Analysis
In addition to the requirements analysis in nonprofit accounting explained in the 1st working paper, accounting process and reports of Good Neighbors International has been reviewed to understand their working process and accounting issues aroused in handling multi-national complex services they carry on.
2.2.1 Excel-based Accounting Format All the accounting have been done using Excel-based predefined templates. Two finance report formats are provided respectively; one for detailed accounting records of entities such as Head Office (HO) and project management team (PMT, Community Development Project (CDP) in GNI), and the other for integrating entities’ accounting data into country level. The financial report forms are as shown in Table 1 and Appendices in detail.
[Table 1] Financial Report Forms
Financial Report for Head Office and Project Team
Financial Report for Integration
Basic Information Basic Information
Cash Journal Exchange Rate
Finance Budget Monthly Detail
Finance Report Country Finance Report
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Code List Bank Statement
Code List
2.2.2 Cash-Based Accounting Most of Korean nonprofit organizations are using cash-based accounting rather than accrual-based. Even GNI and WVK are the biggest organizations among Korean DWNPOs, their local project teams are doing cash-based accounting using Excel-based accounting templates.
Because Korean NPO accounting regulation allows the charitable organizations to keep the books in cash-based, the NPOs do not have to do accrual-based accounting up to now and thus their accounting guidelines are cash-based. However, in case of DWNPOs who has their affiliated entities and/or project teams in foreign countries, the accounting guidelines are conflict with the accounting requirements of the country where their affiliates are located because most of the countries has FASB-like nonprofit accounting regulation asking for accrual-based accounting and the financial statements including the statement of activities and functional expenses report.
2.2.3 Code List (Chart of Accounts) GNI have used the Code List shown in Appendix 1 as a chart of accounts, which is categorized into Income and Expenditure codes only without the balance sheet accounts such as assets, liabilities, and net assets.
Balance sheet accounts are not included in the code list and Assets, Liability, Net Assets are not counted in local project team. Cash and cash equivalents are managed with cash journal at each sub-entities and bank statement in country level Head Office.
The fixed assets has been managed by a separate worksheet and inventory assets was not recorded as assets but it was recognized as expenses when the items are purchased. The balance sheet accounts are included in the unified chart of accounts which is created for new accounting system.
Income codes include the funds provided from Headquarter and various contributors. The fund classes in income accounts are separated from the code list and rearranged into the fund table to accomplish the fund accounting.
Expenditure code is a mixture of characteristic and functional accounts without systematic arrangement. Most of expense codes are the functional accounts which represent the program and its activities rather than the characteristic accounts. Some of expense codes have characteristic expense accounts as the sub-code. The functional accounts is separated from the expense codes and rearranged to Program table. The program and activity is linked to each transaction line item to complete the functional accounting.
2.2.4 Cash Journal All the transactions are recorded in the Cash Journal as attached in Appendix 2. Since the expenditure code is based on the functional account, the characteristic of transaction can only be recognized with the description. The description (characteristic account) may be different from one bookkeeper to others because the chart of accounts is not based on the characteristic accounts. Thus it may cause incorrect balance of characteristic accounts when the financial information of each unit are consolidated together to create the country level financial reports.
2.2.5 Finance Budget & Finance Report Planning and budgeting process is important in the nonprofit organizations like as in governmental organizations. Budget line items should align with accounting (financial statement) line items, and the structure of the full operating budget should match the chart of accounts (the structure of the accounting system), to ensure effective comparisons between budget and actuals.
In GNI’s budget template (Appendix 3), the budget line items is in sync with the code items even the code list is not configured systematically with characteristic accounts. Each unit prepares the monthly finance report in comparison of budget and actuals as shown in Appendix 4.
As the code list is rearranged with the characteristic accounts, the budget template is designed as the
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plan of action for each program the unit carries on, and the budget is integrated together to complete each unit’s budget, then combined to the country’s budget finally.
2.2.6 Integrated Finance Report The finance reports of each CDP are integrated by the country’s head office (HO) to create the country finance reports. The country’s financial reports consist of Basic Information on the country HO and CDPs, Exchange Rate, Monthly Detail for income and expense, Country Finance Report, Bank Statement, and Code List as shown in Table 1.
2.2.7 KOICA Finance Report KOICA1 is one of major contributors in the public sector and asking the accounting and activities reports as following;
ž Incomes and Expenses Statements for IHQ & each country’s HO (Appendix 9) ž KOICA Project Database, Expense Journal, Summary (Appendix 10 to 12)
2.3 Database
Various tables in the database are grouped into three categories, List, Transaction and Report tables, and the tables are linked each other and configured in a Relational Database to conduct Financial, Functional, Fund, and Divisionalized Accounting.
2.3.1 List Tables List tables are including numerous tables for the Chart of Accounts which is the backbone of accounting structure, Contributors, Suppliers & Contractors, Staffs & Volunteers, Unit, Programs, Funds, etc. which are basic information required to operate the accounting system.
Unified Chart of Accounts
The code list reviewed in previous clauses 2.1.3 has been rearranged into Unified Chart of Accounts (UCOA) to be applicable commonly to all the affiliated entities of organization. Major difference between the code list and UCOA is accounts of the balance sheet and the characteristic accounts.
Entities
Entities including Contributors, Vendors, Contractors, Employees (Staffs), Volunteers,
Fund
Fund is one of key parameter in the nonprofit accounting as studied in the 1st working paper. Fund is managed by the contributor who provides the fund and its categories such as permanent restricted (PR), temporary restricted (TR, designated fund in other word) and unrestricted (UR, general fund). The fund information is linked to each transaction line item to provide the statements of activities and functional expenses for specific fund and the financial statements categorized by the characteristics of fund as requested in the new nonprofit accounting standard.
Fund table contains information on Contributors, Fund Name, Fund Type, Designated Program, and other fund related information.
Program
The Program and its activities is a key parameter for the functional accounting and the framework of functional expenses listed in the Statement of Activities, substitute of Statement of Profit and Loss in
1 KOICA: Korea International Cooperation Agency, established in 1991 by the Korean Ministry of Foreign Affairs and Trade as the unique governmental organization for Official Development Assistance (ODA) to enhance the effectiveness of Korea’s grant aid programs for developing countries by implementing the government’s grant aid and technical cooperation programs.
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the private sector. The Program is arranged in hierarchy in 3 level, Program, Project, and Activity as shown in Appendix. The Program information is linked to each transaction record to tracking the purpose of incomes and expenditures, and the income and expense transactions is grouped by the program hierarchy. GNI’s program list is shown in Appendix 15 as a sample of the program hierarchy.
The program table is applied to all project units commonly.
Unit
Unit table contains the divisional information of organization. The divisional classification can vary according to complexity of organizational structure.
Items
An Item is anything that the entity buys, sells, or resells in the course of business, such as products, services, shipping and handling charges, and sales tax (if applicable). It represents everything that can be a line item on a sale or purchase form – for example, services and products provided, things purchased, and assets owned. The items can be used in creating invoices, filling out checks, creating purchase orders, or buying new equipment.
Items handle the behind-the-scenes accounting. In setup process of items, each item is linked to more than one, at least one, offset accounts, such as Expense or Cost of Goods Sold (COGS) account for purchasing, Income account for sales, and Asset account for Inventory and Fixed Asset items. The items can be categorized into various item types predefined such as service, inventory item, fixed asset, other charge, or tax item according to the nature of item.
When the item is used on a form, it posts an entry to that account and another entry to the appropriate accounts receivable, accounts payable, checking, fixed asset, or other account. And the product-related item is also encoded into the item transaction table in order to tracking the item’s input and output as well as quantity on hands.
Currency List
Type List table contains the list of Account type, Entity type, Item type, Transaction type and other enumeration type list which are the essential in categorizing List items and Transaction records.
Type List
Type List table contains the list of Account type, Entity type, Item type, Transaction type and other enumeration type list which are the essential in categorizing List items and Transaction records.
2.3.2 Transaction Tables General ledger type transaction tables are created to cover various transactions such as receiving funds from contributors, recording expenses, handling prepaid expenses to staffs and contractors, and so on. And some specific transaction tables are also ready to handle such foreign currency transactions and inventory item related transactions.
Transaction Ledger
Transaction Ledger table is a master table recording all transaction data in the ledger format along with transaction type, line type, program, fund, currency, divisional information, and other related data.
Item Transaction
Item transaction table is a sub-table of transaction ledger for the transactions including inventory items.
Foreign Currency Transaction
The transaction recorded in foreign currency
Exchange Rate
The exchange rate applied in the transaction records is tracked in the exchange rate table and
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2.3.3 Report Tables To generate numerous reports fast and easy, each View tables (a virtual table computed or collated dynamically in the relational database) are prepared for specific reports.
2.4 User-Oriented User Interface
The user interfaces are designed for non-accounting-majored accountants, which are similar to the form printed on the paper they are familiar with. The terms (label of each field) are also selected in plain English commonly used in nonprofit organizations.
2.5 Auto Journalizing and Positing in background
The transaction information entered in the user-friendly form is journalized and posted into the general ledger and other transaction-specific table automatically behind the scene.
The data entered into each tables is computed into virtual View table to create related reports automatically in real-time.
2.6 Deploying Prototype of AIS
The prototype DWNPO-AIS was deployed to about 250 project management team (PMT) in Good Neighbors International (GNI) and has been in use for 6 months. The accounting data of each PMT collected and consolidated to each country-level Head Office (HO) and Regional Office (RO), then International Headquarter (IHQ) gradually. With tanks to relational database, all the transactions collected together can be recognized and analyzed by each transaction level and also by Program, Fund, Unit and so on.
3. Feedback and Improvement
3.1 Questionnaire
The increasingly complex services have put significant pressure on DWNPOs’ CDPs’ or managers’ abilities to keep and report accounting information for CDPs’ operation. As a response to these needs, a range of accounting knowledge and techniques has emerged and been adopted by CDP unit. The objectives of the survey were to evaluate the results of recommendation executed, the effects of revised accounting information, and the parts and the cause of the terms of the improvements.
We sent survey 440 participations to 33 countries, 187 CDPs and 33 head offices. Survey is conducted to get feedback from the accountants and managers of each PMT, HO, RO, IHQ. The questionnaire consists of 3 parts;
Part 1: Accountant’s background and accounting ability
Part 2: Revised accounting information adoption: past and present
Part 3: Evaluation of a revised accounting information adoption
3.2 Feedback Analysis
Despite the increase in demand of accounting knowledge and accounting skills in accordance with FASB or KAI, there is for DWNPO workers of a lack of awareness of the importance of accounting.
We invited 440 and received nearly 189 responses to the survey – a response rate of 43% as of April
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30, 2014. We are expecting higher responding numbers with time postpone. We asked respondents to participate in interviews in accounting
[Table 2] Descriptive statistics of the sample and results
Regions & Office Country CDP HO Africa 13 53 14 Asia 13 117 13 Central & Latin 5 17 5 International Cooperation Office 2 International Headquarter 1
Total 33 187 33
CDP HO Total
Survey Participated Employee: CDP Manager & Accounting in charge 374 66 440 Number of Respondents 129 60 189 Response Rate 34% 91% 43%
Key Findings The survey revealed noteworthy findings follows:
Accountant’s background and accounting ability are an important part of the operation of programs and projects. 44% of respondents reported that work years in NPO industries were less than 1 year, 34 % were between 2 – 5 years respectively. 64% of respondents reported that knowledge and ability in accounting is scale 1 on a five-point scale. An analysis of table 3 indicates there are no accounting or financial expert.
[Table 3] Accountant’s background and accounting ability
Back Ground Year <1 2- 5 6 - 10 11 - 15 16 < years Total NPO industry work years 13 110 61 5 0 189 Accounting work years to NPO 152 20 12 5 0 189 Total 165 130 73 10 0 378
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Knowledge of Basic Laws and Regulation under NPO operation 0 128 32 20 6 3 0 189
Total 0 605 153 117 56 14 0 945
0% 64% 16% 12% 6% 1% 0% 100%
Revised accounting information adoption- past and present- compared old and revised accounting information. Under old and revised accounting information, recording transaction, generating financial reports, monitoring fund and program and improving process. Under old accounting information, survey results show on lower scale 3 ~ low, 12%, 19%, 45% and 25% respectively, however under revised one, the results show on higher scale 3 ~ high, 12% 57%, 32%, respectively. An analysis of table 4 indicates there are a significant improvement after adapting a revised accounting information on DWNPO accounting and financial reports.
[Table 4] Evaluation of the recommendation executed and the effects of revised accounting information on nonprofit accounting and financial reports
Under Old Accounting Information
Low ← 1 2 3 4 5
→ High Total
Recording accounting under GAAP/IFRS 23 116 27 23 0 0 0 189 Generating financial reports 0 140 35 10 4 0 0 189 Monitoring each fund process 82 40 37 30 0 0 0 189 Monitoring each program activities 82 41 41 25 0 0 0 189 Improving process 0 0 0 0 0 0 0 0 Total 187 337 140 88 4 0 0 756
25% 45% 19% 12% 1% 0% 0% 100%
Under a Revised Accounting Information
Low ← 1 2 3 4 5
→ High Total
Recording accounting under GAAP/IFRS 0 0 0 4 152 33 0 189 Generating financial reports 0 0 0 4 152 33 0 189 Monitoring each fund process 0 0 0 48 89 52 0 189 Monitoring each program activities 0 0 0 57 80 52 0 189 Improving process 0 0 0 0 61 128 0 189 Total 0 0 0 113 534 298 0 945
0% 0% 0% 12% 57% 32% 0% 100%
We have results for evaluation of a revised accounting information adoption in Table 5, Table 6 and Table 7:
In Table 5, comparing old and revised accounting information, time and cost efficiency for accounting and financial reports preparation. It reduced preparation time significantly under revised accounting information adaption.
[Table 5] Evaluation of time and cost efficiency on accounting and financial reports
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Accounting and Financial Reports Preparations Time per Month
Hours <10
11 - 20
21 - 40
41 - 60
61 - 100
100< Hours Total
Under Old Accounting Information 0 0 2 62 123 2 189 Under Revised Accounting Information 0 5 92 92 0 0 189
In Table 6, adaption of a revised accounting information, fundamental operation considerations meet the above average range. This results are useful to bring accounting transparency and usefulness.
[Table 6] Evaluation of a revised accounting information – Transparency and Usefulness
A revised accounting information 1
(Terrible) 2
(Poor) 3
(Average) 4
(Good) 5
(Excellent) Total Efficiency and effectiveness operation 0 0 18 148 23 189 Adapting change of operation and requirements 0 0 18 148 23 189 Recording transaction 0 0 0 37 152 189 Maintain an effective internal control 0 0 58 98 33 189 Providing complete and relevant information 0 0 0 154 35 189 Optimizing program/project process 0 0 3 165 21 189 Improving information quality 0 0 0 172 17 189 Reducing fraudulent transactions 0 0 32 85 72 189
0 0 129 1007 376 1512 0% 0% 9% 67% 25% 100%
In Table 7 with comparing Table 3, DWNPOs’ employees’ accounting knowledge and skill were improved noticeably in practice. The improvement scores were above average as a result.
[Table 7] Evaluation of employees’ accounting knowledge improvement
Accounting knowledge improvement
Low ← 1 2 3 4 5
→ High Total
How quick responding to other request related accounting or financial reports? 0 0 0 109 60 20 0 189 How comfortable for help on accounting matters? 0 0 2 127 33 27 0 189 How rate the statements receive or generate? 0 0 0 69 100 20 0 189
4. Conclusion
As Korea is expanding its social welfare policy while raising its global presence, nonprofit organizations’ social function and role become more significant, but their lack of qualitative characteristics of accounting information, (understandability, relevance, reliability and comparability), transparency in financial management and accounting, and weakness of internal control and organization governance result in a
A method to promote Transparency and Usefulness | Essay 2. 14 of NonProfit Organization’s Accounting Information
credibility gap with their process.
Applying Current Accounting Standards for SWO (2013) in actual DWNPO’s operations, current accounting standards are not enough to cover DWNPOs’ operations which are much more complex forms of. In practice, the need is required for Revised Accounting Standards to be applied to DWNPOs’ multinational entities and complex services.
Previous research studies emphasize the aspects of accounting standards and legal system over nonprofit organizations to just tell about macroscopic analysis and examination result, but practically each of nonprofit organizations such as educational foundations, medical corporations, religious and culture corporations, mutual saving and finance companies, etc. has its own accounting treatment standard and therefore, a study for integration into one accounting treatment standard makes us worry about its practical applicability.
NonProfit organizations in Korea currently face a number of issues concerning accounting, corporate governance and auditing practices. Current Accounting Standards for Korean Social Welfare Organization (SWO) have been issued and revised over the past years. To establish Accounting and Financial Reporting System for DWNPOs’ multi-entities and complex services in Korea, we had interviews and technical meetings with field practitioners as is, analyzed requirements, had training and workshops, and made recommendation. We designed the system to supplement Current Accounting Standards for SWO (2013) after requirements analysis, developed a prototype, analyzed feedback and evaluated outcome in point of internal management operation view.
The difference between other studies and this study is that the FASB or KAI standards proceeds to single entity and single program and this revised accounting information cooperates to multinational entities and complex services. This study provides a supplemental accounting information for DWNPO to increase qualitative characteristics of accounting information, transparency in financial management and accounting, and organization governance and to reduce of weakness of internal control. The outcomes of this study confirm that the significant effect on financial accounting standards, fund accounting, functional accounting and divisionalized accounting (‘3FD’) applied to DWNPO’s accounting and financial reports.
The contribution of this study is first, to build accounting information system with combining fund, functional, and divisionalized accounting concept to general financial accounting for DWNPOs. Second, is to reduce time and increase cost efficiency in preparing accounting and financial reports. Third, is to improve the social transparency and usefulness of accounting and financial information. Fourth, is to have been improving accounting knowledge to employees.
The further study is needed; particularly research focused on the connection between DWNPO’s operation performance and risk management.
A method to promote Transparency and Usefulness | Essay 2. 15 of NonProfit Organization’s Accounting Information
Appendices
1. GNI Code List as of Jan 2012
100 Income Expenditure (200-900) -Continued Expenditure (200-900) -Continued110 Sponsorship Fund 400 Health 800 Advocacy111 GNK 410 Basic Nutrition 810 PR & Campaign112 GNUS 420 Basic Health-Care 811 Publication PR Materials113 GNJP 421 Medical Treatment 812 Campaign120 Non-Sponsorship Fund 422 Check-Up 820 Intergov. Activities121 GNK 423 Medicine Support 821 Lobbying/Policy Proposal122 GNUS 430 Health Education 822 Meetings/Workshop by gov.123 GNJP 440 Health Facilities 830 Social Development Education130 Gov. Fund 441 Construction & Expansion 831 Child's Rights131 GNK 442 Rental Fee 832 Gender Equity132 GNUS 443 Equipment 840 Others133 GNJP 480 Other Emergency Relief & Seed Project140 Designated Fund Medical/Disability Aids 850 Seed Project141 GNK Surgery Support 860 Emergency Relief142 GNUS Other 880 Others143 GNJP 500 Water & Sanitation 900 Administrative Cost150 Local Fund 510 Portable Water 910 Personnel Cost160 Program Earning 511 Well Development OD170 Gift Money 512 Water Purifier AD180 Loan 520 Toilet Installation SSD190 Others 530 Housing & Environment Improvement Office Support191 Remaining Balance Repair & Remodeling Others192 Bank Interest Garbage Disposal 920 Travel199 Others Other 930 Supplies
Expenditure (200-900) 580 Other 940 Hospitality200 Child Sponsorship Management 600 Income Generation 950 Utilities210 New Child Finding 610 Agricultural Development 960 Taxes & Fees220 Child Case Management 611 Agricultural Input 970 Vehicle Maintenance240 Gift Money 612 Agricultural Waster Resources 980 Building Maintenance280 Others 613 Education & Training 990 Other Expenditure
Postage (DHL) 620 LivestockDeath Consolation Livestock BankOthers Fish Farm Support
300 Education & Protection Education & Training310 Child Care Others
Teacher Salary 630 Micro-CreditMaterial Support 640 Credit UnionOutdoor Activities 650 Joint Production & SaleOther 680 Others
320 Basic Education 700 Community Partnership & Network Building321 Primary Education 710 Organizing or Facilitating Committee
Teacher Salary 711 Community Development CommitteeSchool Fee 712 Advisory CommitteeMaterial Support 713 OtherOutdoor Activities 714 Board of DirectorAfter-School Program 720 VolunteersSummer/Winter School 721 Int'l VolunteersOther 722 Local Volunteers
322 Secondary Education 730 Local Leader CultivationTeacher Salary 740 Operation DepartmentSchool Fee 741 Research for ProjectsScholarship 742 Monitoring & EvaluationMaterial Support 743 Developing GuidelinesOutdoor Activities 750 Administrative DepartmentAfter-School Program 751 Human ResourcesSummer/Winter School 752 AccountingOther 753 Equipment/Assets
323 Library Operation 754 Internal ConferenceBook Purchase 755 External Training & Regional WorkshopEquipment Purchase 756 Internal Training & MeetingsOther 760 Community Facilities
330 Eradication of Illiteracy 780 Others340 Vocational education350 Educational Facilities351 Construction & Expansion352 Rental Fee353 Equipment Purchase360 Teacher Training380 Other
A method to promote Transparency and Usefulness | Essay 2. 16 of NonProfit Organization’s Accounting Information
2. GNI CDP Cash Journal, Jan 2012
A method to promote Transparency and Usefulness | Essay 2. 17 of NonProfit Organization’s Accounting Information
A method to promote Transparency and Usefulness | Essay 2. 23 of NonProfit Organization’s Accounting Information
7. GNI Country Finance Report, Integrated
A method to promote Transparency and Usefulness | Essay 2. 24 of NonProfit Organization’s Accounting Information
8. GNI Country Finance Report, Bank Statement
5. Bank Statement
●Account 1Account No. 0-2400-0006-2198 Account HolderBank Name Canadia Bank .PLC Description
Date Description Deposit Withdraw BalanceJan-06-2012 Balance forward 63,672.98US$ 63,672.98US$ Jan-16-2012 Transfer remaining balance from 2011 to Cheung Aek UCDP 4,918.00US$ 58,754.98US$ Jan-17-2012 Transfer remaining balance from 2011 to HO 6,894.00US$ 51,860.98US$ Jan-18-2012 GNK January Sponsorship Fund 44,496.00US$ 96,356.98US$ Jan-18-2012 GNK Non-sponsorship Fund 1,079.00US$ 97,435.98US$ Jan-18-2012 Others I 1,459.00US$ 98,894.98US$ Jan-18-2012 Gift Money 914.00US$ 99,808.98US$ Jan-18-2012 Fund Transfer fee 80.93US$ 99,728.05US$ Jan-31-2012 INT 51.84US$ 99,779.89US$ Jan-31-2012 Tax 2.07US$ 99,777.82US$
A method to promote Transparency and Usefulness | Essay 2. 30 of NonProfit Organization’s Accounting Information
13. Chart of Accounts
AcctNum AcctName AcctGroup AcctType AcctNum AcctName AcctGroup AcctTypeBalance Sheet Accounts 24000 Payroll Liabil ities Liabil ities Other Current Liabil ity
00000 Cash & Cash Equivalents (USD) Assets BANK 24100 Refundable advances Liabil ities Other Current Liabil ity
10000 Cash & Cash Equivalents Assets BANK 25000 Short-term Liabil ities Liabil ities Other Current Liabil ity
10100 Bank Accounts Assets BANK 25100 Eployee loans Liabil ities Other Current Liabil ity
10200 Safebox Assets BANK 25500 Line of credit Liabil ities Other Current Liabil ity
10400 Petty cash Assets BANK 25600 Current portion - LT loan Liabil ities Other Current Liabil ity10700 Savings & ST investments Assets Bank 25700 Other ST payable Liabil ities Other Current Liabil ity10710 Saving accounts Assets Bank 26100 Split-interest l iabil ities Liabil ities Other Current Liabil ity10730 CDs - Temp Restricted Assets Bank 26200 Withholding Tax Liabil ities Other Current Liabil ity10750 Short-term investments Assets Bank 27000 Long-term liabil ites Liabil ities Long Term Liabil ity11000 Accounts Receivable - USD Assets Accounts Receivable 27100 Bonds payable Liabil ities Long Term Liabil ity12000 Contributions receivable Assets Accounts Receivable 27300 Mortgages payable Liabil ities Long Term Liabil ity12200 Grants receivable Assets Accounts Receivable 27500 Capital leases Liabil ities Long Term Liabil ity12250 Discounts - LT grants Assets Accounts Receivable 27700 Other long-term liabil ities Liabil ities Long Term Liabil ity13000 Other receivables Assets Other Current Asset 28100 Gov fixed assets l iabil ity Liabil ities Long Term Liabil ity13100 Advanced Expenses to Staff Assets Other Current Asset 29100 Client deposits Liabil ities Long Term Liabil ity13100 Salary advances Assets Other Current Asset 29200 Reserve for pension fund Liabil ities Long Term Liabil ity13200 Other notes/loans receivable Assets Other Current Asset 30000 Net Assets NetAsset NetAsset13250 Doubtful notes/loans allowance Assets Other Current Asset 30001 Opening Balance Equity NetAsset NetAsset14000 Other assets Assets Other Current Asset 31000 Unrestricted net assets NetAsset NetAsset14100 Inventories for sale Assets Other Current Asset 31100 UR available net assets NetAsset NetAsset14200 Inventories for use Assets Other Current Asset 31200 Transfer to unrestricted NetAsset NetAsset14500 Prepaid expenses Assets Other Current Asset 31300 Bd-designated net assets NetAsset NetAsset14600 Accrued revenues Assets Other Current Asset 31400 Bd desig. quasi-endowment NetAsset NetAsset15000 Inventory Asset Assets Other Current Asset 31500 Fixed operating net assets NetAsset NetAsset16000 Fixed operating assets Assets Fixed Asset 31510 Buildings NetAsset NetAsset16100 Land - operating Assets Fixed Asset 31520 Furniture & equipment NetAsset NetAsset16200 Buildings - operating Assets Fixed Asset 31530 Land NetAsset NetAsset16210 Building 1 Assets Fixed Asset 31540 Leasehold improvements NetAsset NetAsset16211 Cost Assets Fixed Asset 31550 Vehicle NetAsset NetAsset16212 Building Improvements Assets Fixed Asset 32000 Temp restricted net assets NetAsset NetAsset16215 Accum Depreciation Assets Fixed Asset 32100 Temp restricted for programs NetAsset NetAsset16300 Furniture, fixtures, & equip Assets Fixed Asset 32200 Temp time restricted net assets NetAsset NetAsset16310 Furniture Assets Fixed Asset 33000 Perm restricted net assets NetAsset NetAsset16311 Cost Assets Fixed Asset 33100 Endowment net assets NetAsset NetAsset16315 Accum Depreciation Assets Fixed Asset16320 Fixtures Assets Fixed Asset Income Statement Accounts16321 Cost Assets Fixed Asset 40000 Contributions Income Income16325 Accum Depreciation Assets Fixed Asset 40100 GN Korea Income Income16330 Equipments Assets Fixed Asset 40110 GNK General Income Income16331 Cost Assets Fixed Asset 40120 GNK Gift Money Income Income16335 Accum Depreciation Assets Fixed Asset 40130 GNK Designated Fund Income Income16400 Vehicles Assets Fixed Asset 40140 GNK Government Income Income16410 Vehicle 1 Assets Fixed Asset 40141 KOICA Income Income16411 Cost Assets Fixed Asset 40200 GN USA Income Income16415 Accum Depreciation Assets Fixed Asset 40210 GNUSA General Income Income16500 Heavy Equipments Assets Fixed Asset 40220 GNUSA Sponsorship Income Income16510 Heavy Equipment 1 Assets Fixed Asset 40230 GNUSA Gift Money Income Income16511 Cost Assets Fixed Asset 40240 GNUSA Designated Fund Income Income16515 Accum Depreciation Assets Fixed Asset 40250 GNUSA Government Income Income16800 Construction in progress Assets Fixed Asset 40251 USAID Income Income17000 Investments Assets Other Asset 40300 GN Japan Income Income17100 Marketable securities Assets Other Asset 40310 GNJP General Income Income17200 Land held for investment Assets Other Asset 40320 GNJP Sponsorship Income Income17400 Buildings held for investment Assets Other Asset 40330 GNJP Designated Fund Income Income17450 Accum dep - bldg investment Assets Other Asset 40340 GNJP Gift Money Income Income17800 Investments - other Assets Other Asset 40350 GNJP Government Income Income18100 Other long-term assets Assets Other Asset 40351 JICA Income Income18500 Split-interest agreements Assets Other Asset 40400 Local Income Income19100 Collections - art, etc Assets Other Asset 40410 Local General Income Income19500 Funds held in trust by others Assets Other Asset 40420 Local Sponsorship Income Income19600 Guarantee deposits on lease Assets Other Asset 40430 Local Designated Fund Income Income19700 Other guarantee deposits Assets Other Asset 40440 Local Government Income Income20000 Payables(Local Currency) Liabil ities Accounts Payable 40450 Local Income Generation Income Income20100 Accounts payable(General Use) Liabil ities Accounts Payable 40560 Local Micro Credit Income Income20200 Grants & allocations payable Liabil ities Accounts Payable 40500 Other Contributions Income Income21000 Credit Cards Liabil ities Credit Card 40510 International Contributions Income Income21300 Credit Card 3 Liabil ities Credit Card 43000 Donated goods & services Income Income21500 CDPs Payable Liabil ities Other Current Liabil ity 43010 Donated prof. svc -GAAP Income Income22000 Accrued liabil ities Liabil ities Other Current Liabil ity 43020 Donated other svc -non-GAAP Income Income22100 Accrued payroll Liabil ities Other Current Liabil ity 43030 Donated use of facil ities Income Income22200 Accrued paid leave Liabil ities Other Current Liabil ity 43040 Gifts in kind - goods Income Income22300 Accrued payroll taxes Liabil ities Other Current Liabil ity 43050 Donated works of art, etc Income Income22400 Accrued sales taxes Liabil ities Other Current Liabil ity 45000 Split-interest incomes Income Income22410 Sales taxes payable Liabil ities Other Current Liabil ity 45100 Split-int. agmnt contributions Income Income22450 Sales taxes refundable Liabil ities Other Current Liabil ity 45200 Gain(loss) split-int agreements Income Income22500 Accrued expenses - other Liabil ities Other Current Liabil ity 49900 Uncategorized Income Income Income23000 Unearned revenue Liabil ities Other Current Liabil ity23100 Deferred contract revenue Liabil ities Other Current Liabil ity23500 Other unearned revenue Liabil ities Other Current Liabil ity
A method to promote Transparency and Usefulness | Essay 2. 31 of NonProfit Organization’s Accounting Information
AcctNum AcctName AcctGroup AcctType AcctNum AcctName AcctGroup AcctType50000 Revenue-gov agencies Income Income 77000 Travel & meetings expenses Expenses Expense50100 Agency (gov) contracts/fees Income Income 77100 Lodging & Meal Expenses Expense50400 Local gov contracts/fees Income Income 77200 Transportation Expenses Expense50800 Medicare/Medicaid payments Income Income 77300 Per-deim Expenses Expenses Expense51000 Revenue-program-related Income Income 77500 Conferences, meetings Expenses Expense51800 Program service fees Income Income 77900 Other Travel Expenses Expenses Expense51850 Bad debts, est - program fees Income Income 78000 Automobile expenses Expenses Expense52000 Revenue from dues Income Income 78100 Fuel Expenses Expense52100 Membership dues-individuals Income Income 78200 Auto Maintenance Expenses Expense52200 Assessments & dues-org. Income Income 78300 Rent car expenses Expenses Expense53000 Revenue from investments Income Income 78400 Other automobile expenses Expenses Expense53100 Interest-savings/ST investments Income Income 79000 In-Kind Expenses Expenses Expense53200 Dividends&interests-securities Income Income 79100 Donated prof. services - GAAP Expenses Expense53300 Revenue rent Income Income 79200 Donated other serv.-non-GAAP Expenses Expense53350 Revenue rental cost Income Income 79500 Donated materials & supplies Expenses Expense53500 Personal property rent Income Income 79800 Donated facil ities Expenses Expense53550 Personal property rental cost Income Income 80000 Managing & General Expenses Expenses Expense53600 Other investment income Income Income 81000 HO Salaries & related expenses Expenses Expense53700 Securities sales - gross Income Income 81100 HO Salaries & wages Expenses Expense53750 Securities sales cost Income Income 81200 HO Payroll expenses Expenses Expense54000 Revenue from others Income Income 81300 HO Payroll taxes, etc. Expenses Expense54100 Non-inventory sales -gross Income Income 81400 HO Insurances Expenses Expense54150 Non-inventory sales cost Income Income 81500 HO Severance Pay Expenses Expense54200 Bank Interest Income Income 82000 HO Office Expenses Expenses Expense54300 Gain of exchange rate Income Income 82100 Facil ities Expenses Expense54400 Gross sales - inventory Income Income 82110 Rent/parking/oth. occupancy Expenses Expense54450 Cost of inventory sold Income Income 82120 Util ities Expenses Expense54500 Advertising revenue Income Income 82130 Maintenance & Repair Expenses Expense54600 Affil iate revenues Income Income 82200 Equipment's & Furniture Expenses Expense54900 Misc revenue Income Income 82210 Equipment Purchasing Cost Expenses Expense57000 Special events Income Income 82220 Furniture Purchasing Cost Expenses Expense57100 SE non-gift revenue Income Income 82230 Equipment Rental Expenses Expenses Expense57200 SD gift revenue Income Income 82240 Maintenance & Repair Expenses Expense69000 NA released from restriction Income Income 82290 Depreciation Expenses Expenses Expense69100 Satisfaction of use restriction Income Income 82300 Operating Expenses Expenses Expense69200 LB&E acquisition satisfaction Income Income 82310 Supplies Expenses Expense69300 Time restriction satisfaction Income Income 82320 Tel & telecommunications Expenses Expense70000 Cost of Goods Sold Expenses Cost of Goods Sold 82330 Postage & shipping Expenses Expense71000 Grants & direct assistance Expenses Expense 82340 Mailing services Expenses Expense71100 Contracts - program-related Expenses Expense 82350 Printing & copying Expenses Expense71200 Grants to other organizations Expenses Expense 82360 Books/subscrpt/references Expenses Expense71400 Awards & Grants to indiviual Expenses Expense 82390 Other Operating Expenses Expenses Expense71500 Specific Assistance Expenses Expense 82500 HO Automobile expenses Expenses Expense71510 School Fee Expenses Expense 82510 HO Fuel Expenses Expense71520 Scholarship Expenses Expense 82520 HO Auto Maintenance Expenses Expense71530 Invest - Income Generation Expenses Expense 82530 HO Rent car expenses Expenses Expense71590 Other Assistance Expenses Expense 82550 HO Other automobile expenses Expenses Expense72000 Salaries & related expenses Expenses Expense 84000 Other expenses Expenses Expense72100 Salaries & wages Expenses Expense 84100 Interest-general Expenses Expense72200 Benefits, Contributions Expenses Expense 84200 Insurance - non-EE related Expenses Expense72400 Payroll taxes, etc. Expenses Expense 84300 Membership dues - org. Expenses Expense72600 Insurances Expenses Expense 84400 Staff development Expenses Expense72700 Lecturer & Trainer Fee Expenses Expense 84500 List rental Expenses Expense72800 Severance Pay Expenses Expense 84600 Outside computer services Expenses Expense73000 Professional Service Expenses Expenses Expense 84800 Contingency provisions Expenses Expense73100 Consulting Expenses Expense 84900 Other expenses Expenses Expense73200 Fundraising Fees Expenses Expense 85000 Business expenses Expenses Expense73300 Accounting & Audit fees Expenses Expense 85100 Bad debt expense Expenses Expense73400 Legal fees Expenses Expense 85200 Sales taxes Expenses Expense73500 Advertising Expenses Expenses Expense 85300 UBITaxes Expenses Expense73600 Professional fees - other Expenses Expense 85500 Taxes - other Expenses Expense73700 Temporary help - contract Expenses Expense 85600 Fines, penalties, judgments Expenses Expense74000 Program Operating Expenses Expenses Expense 85700 Organizational (corp) expenses Expenses Expense74100 Program-Related Materials Expenses Expense 85800 Bank Service Charge Expenses Expense74150 Construction Expenses Expense 85900 Loss of Exchange loss Expenses Expense74200 Supplies Expenses Expense 85910 Extraordinary loss Expenses Expense74300 Tel & telecommunications Expenses Expense 68000 Unrealized gain/loss Expenses Other Income74700 Books/subscriptions/references Expenses Expense 98000 Fixed asset purchases Expenses Other Expense74800 Bank Service Charge Expenses Expense 98100 Capital purchases - land Expenses Other Expense74900 Other Expenses Expenses Expense 98200 Capital purchases - building Expenses Other Expense75000 Facil ity & Maint. Expenses Expenses Expense 98300 Capital purchases - equipment Expenses Other Expense75100 Rent/parking/other occupancy Expenses Expense 98400 Capital purchases - vehicles Expenses Other Expense75200 Util ities Expenses Expense 99000 Non Op Other Expenses Expenses Other Expense75300 Maintenance & Repair Expenses Expense 99100 Payments to affi l iates Expenses Other Expense75400 Property Taxes Expenses Expense 99200 Additions to reserves Expenses Other Expense75500 Mortgage interest Expenses Expense 99300 Program adm allocations Expenses Other Expense75900 Depreciation Expenses Expenses Expense76000 Equipment & Furnitures Expenses Expense76100 Equipment Purchase Cost Expenses Expense76200 Equipment rental Expenses Expense76300 Equipment Maintenance Expenses Expense76400 Depreciation Expenses Expenses Expense
A method to promote Transparency and Usefulness | Essay 2. 32 of NonProfit Organization’s Accounting Information
14. Programs
CODE PROGRAM DESCRIPTION01000 Child Sponsorship01010 New Child Finding CIF research01020 Child Case Management Case Management, Counselling, Death Consolation01030 Gift Delivery Gift Money project02000 Education & Protection02010 Early Childhood Education Day Care Center Operation, Pre school Support
02020 Primary Education School Support, Scholarship Program, After School Program, Summer & Winter School Program, Sports & Outdoor Activities
02030 Secondary Education School Support, Scholarship Program, After School Program, Summer & Winter School Program, Sports & Outdoor Activities
02040 Post Secondary Education Scholarship Program02050 Library Book supplement, Media contents02060 Eradication of Illiteracy 02070 Vocational Training Tailoring, Carpentry, Computer, etc.02080 Education Facilities School Construction02090 Child and Youth Protection Shelther, Group homes Operation03000 Health03010 Basic Nutrition Feeding Program, Nourising & Supplementay Food Distribution(Vitamin, Iodine etc),
03020 Basic Health Care Services in general; General Immunization, Drugs Supply, Health Check-up, Baby Weighing, Disability Aids
03030 Medical Service Services by doctor or professionals; Surgery support, Dental Clinic Services03040 Disease Control Services for specific disease like Malaria, Cholera, Measles etc.03050 Reproductive Health Care & Family Planning Prenatal and Postnatal Care including delivery, Ultrasound service, Contraception Planning03060 Health Education Education in General health, Nutrition03070 STD Control including HIV/AIDS Condom Distribution, STD Education,
03080 Basic Health Infrastructure Hospital & Clinic Construction and Operation, Mobile Clinic, Medical equipment support, Insurance system
04000 Water & Sanitation04010 Basic Drinking Water Well Development, Purifier Distribution, WaterTank Installation, 04020 Basic Sanitation Hygiene Kit Distribution, Toilet Installation04030 Waste Management and Disposal Garbage-Can Distribution, 04040 Water Supply & Sanitation Large System Water Storage, Supply & Sewage System04050 Education in Water Supply & Sanitation Hygiene Class, Water-use Class05000 Income Generation05010 Agriculture Development Agricultural Input; Seed, Equipment, Technical Training, Co-Farming05020 Livestock & Fishery Livestock bank, Fish Farming, Co-Farming of livestock or fish05030 Cooperatives Cooperatives support, Joint production, Joint Market Operation, Seed Invest for local group05040 Microfinance Micro-Credit, Micro-Saving, Micro-insurance05050 Small & Medium-Size Enterprises (SME) Social Enterprise Operation, Adopting appropriate tech.06000 Community Partnership & Network Building06010 Organizing/Facilitating Committee Community Development Committee support, Advisory Committee support 06020 Volunteers Allowance for Paid Volunteers, Volunteer Group support, Volunteer Workshop.06030 Local Leader Cultivation Leadership training, Benchmarking trip06040 Community Facilities including Community Center, Community Bus, Mom Center construction06050 Network Building Membership Fee for Alliance, Local NGO Incubation07000 Advocacy07010 Campaign Concert, Contest, Sports Activity, Street Campaign07020 Policy Proposal Policy Development, Lobbying07030 Social Development Education Child's right, Gender equity, Global Citizenship, Environment Education08000 Environment08010 Housing Condition Improvement Stove Instrallation, G-Saver, Roof Change, Reparing & Renovation08020 Energy Generation & Supply Small hydro power supply, Solar System, Charcoal, Gas Distribution08030 Forestry Development Plantation, Forestry Protection08040 Civil Infrastructure Road, Bridge09000 Emergency Relief (ONLY IN EMERGENCY SITUATION)09010 Water Sanitation & Hygiene Promotion Drinking water distribution,Hygiene Kit Distribution, Toilet installation, Sewage Disposal09020 Food Aid & Nutrition Food Distribution, Fortified Food Support09030 Non-food Item & Shelter Blanket, Tent, and other Non-Food item Distribution09040 Medical Service & PTSD Medical Service Provision, Therapy, Group Treatment09050 Network & Training Disaster Risk Reduction, OCHA & Other organization Cooperation, Sphere Training09060 Reconstruction & Rehabilitation School & House Construction, Local Group Support80000 R&D81000 Assessment Research, Survey, Data Purchase82000 Monitoring & Evaluation Monitoring Trip, Survey, Impact Evaluation83000 Pilot Project Small Scale pilot project84000 Conference, Workshop and Training External & Internal Conference, Workshop, Trining for staffs85000 Human Resources Recuiting, Job Training, HR Manual Development90000 Fund Raising Program95000 Project Management98000 Office Management(R.O)99000 Office Management
A method to promote Transparency and Usefulness | Essay 2. 33 of NonProfit Organization’s Accounting Information
15. Unit
A method to promote Transparency and Usefulness | Essay 2. 34 of NonProfit Organization’s Accounting Information
References
1. Korean Ministry of Health and Welfare, 2012, “Financial Accounting Rule for Social Welfare Organization and Social Welfare Facility”
2. Korea Accounting Institute, 2003, “The Guidance for Financial Statements and its preparation of NonProfit organizations”
3. Korea Accounting Institute, Aug. 7 2013, “Improvement of Accounting System to improve Social Transparency – Necessarily, Progress of Enactment, and Legalization Plan of NonProfit Organization Accounting Standard”
4. Wan-Hee Kim. Hye-jeong Nam, Kyu-An Jeon, Chang-Mo Jung, and Ok-Rial Son, Accounting Journal, Vol. 22, No. 3, June 2013, “Transparency Improvement of NonProfit Organization and Role of Accounting”, pp. 159-197
5. Not-For-Profit Accounting: Reporting and Analysis, Delta Publishing Company (2013)
Sources of GAAP § ASC 958-605-05-3, Not-for-Profit Entities: Revenue Recognition (FAS-116, Accounting for Contributions
Received and Contributions Made). § ASC 958-205-05-5, Not-for-Profit Entities: Presentation of Financial Statements (FAS-117, Financial
Statements of Not-for-Profit Organizations). § ASC 958-320-05-2, Not-for-Profit Entities: Investments—Debt and Equity Securities (FAS-124, Accounting
for Certain Investments Held by Not-for-Profit Organizations). § ASC 815, Derivatives and Hedging (FAS-133, Accounting for Derivative Instruments and Hedging
Activities). § ASC 958-20-15-3, Not-for-Profit Entities: Financially Interrelated Entities (FAS-136, Transfers of Assets to
a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others). § ASC 360-10-05-4, Property, Plant, and Equipment: Overall (FAS-144, Accounting for the Impairment or
Disposal of Long-Lived Assets). § ASC 820-10-05, Fair Value Measurements and Disclosures: Overall (FAS¬157, Fair Value Measurements). § ASC 825-10-10, Financial Instruments: Overall (FAS-159, The Fair Value Option for Financial Assets and
Financial Liabilities). § Additional Guidance: Related FASB Staff Positions or questions and answers previously issued as FASB
Staff Implementation Guides
A method to promote Transparency and Usefulness | Essay 2. 35 of NonProfit Organization’s Accounting Information
Survey
Part I. Background and Ability: Please fill in the following general information. (Select multiple, if applicable
1. Which region are you belong to?
¨ Asia ¨ Africa ¨ South America ¨ Other :____________________
2. Which major programs is your CDP handling? (Select multiple, if applicable) ¨ Child Sponsorship ¨ Education & Protection
¨ Health ¨ Water & Sanitation
¨ Income Generation ¨ Community Partnership & Network Building
13. What is your current accounting and financial reporting system? ¨ Simple Book ¨ Excel ¨ Microsoft Dynamics GP (Great Plains) ¨ Peach Tree ¨ QuickBooks ¨ Intacct ¨ Other:______________
14. How many are active users of you accounting and financial reporting applications? ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ More than 5
15. On a five-point scale, can you demonstrate your basic computer operation skills? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
16. On a five-point scale, can you explain your knowledge of accounting/financial reporting?
Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
17. On a five-point scale, can you identify and explain the fundamental principles of nonprofit accounting?
Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
18. On a five-point scale, can you explain the principles and standards for NPO accounting? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
A method to promote Transparency and Usefulness | Essay 2. 37 of NonProfit Organization’s Accounting Information
19. On a five-point scale, can you explain the effective control and monitoring of fiscal operations?
Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
20. On a five-point scale, are you able to read and interpret financial statements and audit reports? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
21. On a five-point scale, can you explain the importance of a mission orientation and mission statement for nonprofit organizations?
Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High 22. On a five-point scale, can you explain the role of nonprofit organizations in advocacy and the
public policy process? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
23. On a five-point scale, can you demonstrate basic knowledge of fund operating components?
Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High 24. On a five-point scale, can you describe the process for developing and implementing new
programs, including conducting a needs assessment for the targeted clientele? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
25. On a five-point scale, can you demonstrate a working knowledge of the basic laws and
regulations under which nonprofit operate? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
26. On a five-point scale, can you describe the four basic steps involved in risk management?
Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
27. On a five-point scale, can you explain effective risk management and crisis management? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
Part II. Revised Accounting Information System adoption: Past and Present (Please fill in the following general information. Select multiple, if applicable) 28. What software did you use for preparing financial reports before using revised accounting system?
¨ Simple Book ¨ Excel ¨ Microsoft Dynamics GP (Great Plains)
¨ Peach Tree ¨ QuickBooks ¨ Intacct ¨ Other:________________________
29. What is your current accounting and financial reporting system?
¨ Simple Book ¨ Excel ¨ Microsoft Dynamics GP (Great Plains) ¨ Peach Tree ¨ QuickBooks ¨ Intacct ¨ Other:________________________
30. Financial reports prepared on a: Past Current ¨ Cash basis ¨ Cash basis ¨ Accrual basis ¨ Accrual basis
31. Do you summarize accounting records revenue and expenditures from grants/funds according to
A method to promote Transparency and Usefulness | Essay 2. 38 of NonProfit Organization’s Accounting Information
different budget categories? ¨ Yes ¨ No ¨ N/A
32. How often are financial reports prepared for? ¨ Monthly ¨ Quarterly ¨ Annually ¨ N/A
33. On a five-point scale, how is a revised accounting system implemented within your CDP? Low ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → High
34. What are some of the top initiatives your CDP is undertaking in a revised accounting system?
35. On a five-point scale, most effectively trigger the using of a revised accounting system in your CDP? 1) Recording accounting transaction under GAAP/IFRS
4) Maintaining an effective internal control structure and process ¨ 1 (Terrible) ¨ 2 (Poor) ¨ 3 (Average) ¨ 4 (Good) ¨ 5 (Excellent)
5) Providing complete and relevant information to information users (donors/contributors, government, and head office/quarters, etc.) ¨ 1 (Terrible) ¨ 2 (Poor) ¨ 3 (Average) ¨ 4 (Good) ¨ 5 (Excellent)
10) Managing performance in the context of operation risk ¨ 1 (Terrible) ¨ 2 (Poor) ¨ 3 (Average) ¨ 4 (Good) ¨ 5 (Excellent)
48. On a five-point scale, on the most recent occasion while you are using a revised accounting information, how quickly did you respond to other request related accounting or financial reporting?
Slow ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 →
49. On a five-point scale, how comfortable are you in asking for help on accounting matters? Hard ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → Easy
50. On a five-point scale, how would you rate the statements you receive or generate? Unclear ← ¨ 1 ¨ 2 ¨ 3 ¨ 4 ¨ 5 → Understandable
