Question: The TGF Care Facility TGF is a not for profit

The TGF Care Facility (TGF) is a not- for- profit organization dedicated to providing services in the care and rehabilitation of seniors with physical or mental disabilities. The main programs are the seniors’ residence program and the home- care program. TGF also sponsors research activities and conducts educational activities for its clients, their relatives, and the general public.
TGF has an eight- person board of directors that sets policy and approves plans, but the day- to- day operations are left to Joe, the full- time, salaried executive director. At a recent meeting, Joe told you that he is not satisfied with the information provided in the annual financial statements. He does not see how he and the board can make useful decisions on the basis of information presented in the financial statements. He wants the financial statements to be audited as this may help improve financial reporting and provide credibility to the financial statements, which may, in turn, increase donor confidence and donations. The financial statements have never been audited in the past.
Revenues for TGF’s activities exceeded $ 600,000 per year in 20X8 and 20X9. Revenues are obtained from a variety of sources. Approximately 50% of the total revenue is obtained from the residents in the form of a user fee. Approximately 30% of the total revenue is obtained from the Ministry of Social Services. Most of the remainder is obtained from bequests and from donations by foundations, corporations, and individuals.

Prepare the memo to the board of directors. Revenue recognition policies should use the deferral method.
Exhibit E
Notes on Accounting System and Practices
1. The annual financial statements consist of a statement of financial position, a statement of cash receipts and disbursements, and a statement of changes in net assets. The statement of cash receipts and disbursements compares the actual results for the year against the original budget of the year.
2. The budget is prepared annually by the treasurer of the board in co-operation with the executive director. A monthly comparison of the year-to-date expenditure with the total budgeted amounts, on a line- by- line basis, is prepared by the bookkeeper and forwarded to the executive director and treasurer.
3. Grants from governments, foundations, and corporations are recorded as revenue when pledges are made or grants are announced. Donations from individuals are recorded as revenue when the cash, cheque, or credit card voucher is received, regardless of whether the cheque or voucher is current- dated or post- dated.
4. Expenditures are charged to accounts as paid, on the basis of the type of expenditure; for example, all salaries are charged to a single account, all furniture replacements and repairs are charged to a single account, and so forth.
5. The historical cost of the buildings and land is carried on the SFP. The buildings are not amortized. The cost of furniture and equipment is charged to operations when the expenditure is made.

View Solution:

Sale on SolutionInn
  • CreatedMarch 13, 2015
  • Files Included
Post your question