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Glossary of Terms

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									                                  Glossary of Terms


Accounting is the process to capture, record, review, summarize and report financial
data.

Assets – Items held by the organization that have value and increase an organizations
total value.

Audit – A review of the organizations financial statements, fiscal policies and control
procedures to determine if the statements fairly represent the organizations financial
position and if organizational procedures are in accordance with Generally Accepted
Accounting Principles (GAAP).

Audited Financial Statements – An evaluation by an independent auditing firm of a
nonprofits organizations financial position.

Audit Resolution Process - The resolution of all audit findings on grants, contracts, and
cooperative agreements, including those contained in pre-award reviews of proposed
contracts.

Balance Sheet – A report listing the assets, liabilities and the organizations equity at a
particular point in time.

Bookkeeping - The simple recording of transactions.

Budget is a financial plan of action that is based on organizations objectives and
historical costs. Mechanism can help to ensure actual costs do not exceed planned
amounts.

Chart of Accounts- The formal listing of all the items that need to be accounted for.
They are numbered and grouped according to whether they are assets, liabilities, fund
balance, revenues or expenses. They must be established to report both natural and
functional expenses and is the basis for generation of financial statement.

CFDA number – The number assigned to a Federal program in the Catalog of Federal
Domestic Assistance (CFDA). The CFDA number for AmeriCorps is 94.006

Cost Allocation Plan - A narrative description of the procedures that will be used in
identifying, measuring and allocating all costs to the programs administered by the
organization.

Cost Sharing - Expenditures made by an organizations with it own funds or resources, or
those donated to allow it to bear a share of the cost of meeting a predetermined cost
objective; means that portion of project or program costs not borne by the Federal
Government.



Preparing for & Responding to Audits
2001 Points of Light Conference
Walker & Company LLP 6/28/01                                                     Page 1 of 3
                                 Glossary of Terms

Depreciation – This is a way of accounting for the fact that equipment gets used up over
time. It consists of taking the amount that a large item costs and spreading out the
expense over time rather than recording all the expense at the time the item is purchased.

Deferred Revenue – Money that the organization has received, but has not yet earned as
of the closing date on the balance sheet. This amount is carried as a liability until the
organization provides the goods or services for which the money was received.

Employer Identification Number (EIN) – A nine-digit number assigned by the Internal
Revenue Service. All IRS designated 501 c (3) nonprofit organizations have an EIN.

FASB – Financial Accounting Standards Board. Responsible for setting common
standards in accounting and financial reporting.

Financial Statements – Standard reports usually including an income statement, a
balance sheet and a statement of changes in financial position.

Fiscal Year – The 12-month period of time during which revenues and expenses are
tallied. This period of time does not have to correspond to the calendar year.

Form 990 – The annual document used by approximately one-third of all public charities
to report information about their finances and operations to the federal government, used
in lieu of a tax return (IRS).

Fringe Benefit – Benefits to an employee other than salary or wages. These can include
tax withholdings (Federal, State, FICA, Medtax, and unemployment insurance), health
insurance, dental insurance, pension plans and workers compensation insurance.

Fund Balance(s) – In a nonprofit, this takes the place of the owner’s equity. This is a
reserve than an organization builds for future needs.

GAAP – Generally Accepted Accounting Principles – Conventions, rules and
procedures that define general accounting practice, including broad guidelines as well as
detailed procedures.

GASB – Government Accounting Standards Board. Federal oversight agency for
accounting rules and procedures as they pertain to federal agencies or federal funds.

General Ledger – A book or file in which each account listed in the chart of accounts
has a separate page or itemization. This is the central hub of an accounting system,
which allows an organization to report on all accounting transactions.

Income – Money that the organization has received from contributions, grants, the
performance of services, etc.



Preparing for & Responding to Audits
2001 Points of Light Conference
Walker & Company LLP 6/28/01                                                   Page 2 of 3
                                   Glossary of Terms

Indirect Cost Proposal - Indirect Cost Proposal-- The documentation prepared by a
grantee organization to substantiate its claim for the reimbursement of indirect costs. This
proposal provides the basis for review, audit, and negotiation leading to the establishment
of the organization's indirect cost rate(s). Organizations should work with their cognizant
agency, the federal agency that grants them the most funds.

Indirect Cost Rate - Indirect Cost Rate -- The ratio, expressed as a percentage, of an
organization's total indirect costs to its direct cost base (commonly direct salaries and
wages). When a rate is established for a specific activity or program (e.g., research) the
rate represents the ratio of the total indirect costs allocated to the activity or program to
the direct base costs of the activity or program.

In-kind contributions - Donated goods or serviced on non-cash made by a third party.

Internal Controls – Integral part of financial management. Includes various methods to
safeguard assets, ensure reliability of accounting data and comply with management
policies, and funding conditions.

Liabilities – Items that are owed by an organization, purchases made on credit.

Matching - Expenditures made by an organizations with it own funds or resources, or
those donated to allow it to bear a share of the cost of meeting a predetermined cost
objective; means that portion of project or program costs not borne by the Federal
Government.

Office of the Inspector General – An office in each federal agency mandated by
Congress with the responsibility for each federal departments efforts to prevent fraud,
abuse and waste.

OMB – Office of Management and Budget. Federal Agency that overseas and
approves Financial data and forms for the government.

Revenue – Income earned during a specific period of time.

Ruling Year – The year that the IRS granted an organization 501 c (3) status.

Variable Cost – Costs within an annual budget that fluxuate within the time period,
depending on usage. An example would be the cost of supplies, specifically textbooks
for students.




Preparing for & Responding to Audits
2001 Points of Light Conference
Walker & Company LLP 6/28/01                                                       Page 3 of 3

								
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