Memo Gabriel School (1).docx

MEMO TO: MR.GII SMITH BOARD DIRECTOR FROM: CONSULTANT DATE: 5TH MARCH 2017 SUBJECT: FINDINGS AND RECOMMENDATIONS FOR THE REVIEW OF FINANCIAL REPORTING This is to inform you that financial reporting in a nonprofit organization is very important in determining the financial position of the organization. Gabriel School being nonprofit organization should report its financial statements in accordance with the accounting standards. This is because the accounting standards provide the users with reliable information about the organization financial position. The following are the finding of the financial reporting review: Balance sheet The balance sheet of the school was not structured well. This means that it was not prepared in accordance with accounting standards. For instance, the title of the balance sheet was wrong because the balance sheet is prepared as at a given time but not as of as indicated. Also, the fixed asset section was not well prepared because a good balance sheet should report fixed assets at their net value. More so, the nonprofit organizations are supposed to report a statement of financial position but not the balance sheet.

Profit & Loss Statement It was found that there was a mistake in the Profit and Loss Statement. The error was in the title because the title should read” for the year July through September 2014” but not “July through September 2014.It should not be Profit $ Loss Statement instead it should be a statement of activities. Statement of cash flows The statement of cash flow was not prepared as per the accounting standards because the depreciation was reported in the investing activities sections instead of operating activities. Also, the title should read “for the ending September 2014”.For that reason, the organization should correct the statement for the organization to determine accurate cash flows. Recommendations The school should use accounting reporting standards for a nonprofit organization in preparing its financial statements for the purpose of providing reliable information to the users. In reporting financial statements, the organization should ensure that every item is classified correctly to avoid confusion. To improve reporting the organization should hire skilled and experienced accountants that will help the organization to prepare proper statements. Thank you Consultant