A recent article in Barron’s said this:
“Non-Profit accounting is arguably one of the last vast wastelands of corporate accountability; rules are lax, disclosure is minimal and available data are usually months, or even years, old.”
Robert Kesten, a consultant, policy advisor, and nonprofit executive added:
“A good accountant or bookkeeper working for a nonprofit can make it pretty hard for a donor to pick up on accounting issues.”
Recently, the FASB (Federal Accounting Standards Board) introduced new recommendations regarding: net-asset classification, improved disclosures of information useful in assessing liquidity, whether NFPs would be allowed to use either the direct method or indirect method of presenting operating cash flows, and whether unrestricted net assets should be renamed net assets without donor restrictions.
Question - Do some nonprofits utilize poorly worded, but entirely legal and ethical, accounting rules to hide their true financial position?