Scenario The Guide Dogs Association (EDA) is a mid-sized not-for-prot organization and its primary purpose is to provide trained guide dogs to persons with vision impairments. EDA is funded solely through fundraising efforts. Most large donations are designated to be used for specic purposes only. EDA uses the deferral method of accounting. Bill is the senior accountant with EDA and he assists the nance manager with preparing monthly financial statements including detailed statements for key donors on the use of their donations. Ann, a director serving on GDA's Board of Directors, recently completed indepth governance training. Upon completion, she made a number of suggestions to the board to improve GDHs governance policies and procedures. These included outlining policies and procedures impacting the organization through the creation of a governance manual, a ve~year strategic plan and the creation of an employee handbook including a code of ethics. The directors should also sign a lCode of lConduct agreement upon joining the board. The board accepted all of Ann's suggestions, and as a result, Ann presented the new policies, procedures and documents to all employees and added that all employees can contact her at any time to discuss the policies or to voice any concerns. She believes that it is important that, as a director, she has a close relationship with the employees. It is January 5, EDD-t5 and the fundraising manager has secured a $200,0UD donation from a prominent member of the community to suppon the training of four dogs to be provided to recipients within 24 months. The donor requires that the funds be used only for direct costs and the budgeted administration allocation: however, he has agreed that if the cost to train the four dogs is greater than 10% of the budgeted amount, he will contribute up to a further $2CI,DDO. He has also asked that a statement of operations be provided annually detailing expenses incurred against this donation in the period. Bill was asked to prepare this statement for the donor. Bill had prepared the original budget [see Exhibit A] that determined that it cost $5,00 to train one guide dog. Training requires one training manager and one training assistant to each spend 15% of their time working with one puppy for 24 months. The full amount of the training assistant's and the training manager's salary and benefits is $E. per year and $BG,DUU per year, respectively. The direct program costs relate to costs to raise the puppy such as food, veterinary expenses and training tools including leashes, harnesses, balls and specialized non-capital equipment. Given their nature, a higher percentage of these costs are incurred in the rst year