Statement of Functional Expenses: Not-for-Profit Financial Reporting


Like many other businesses, not-for-profits (NFPs) incur costs such as salaries, rent and utilities. Unique to NFPs is the requirement that those expenses be classified in the financial statements according to purpose, or function, for which they were used.

The statement of functional expenses assists readers of the NFP’s financial statements in associating expenses with the service efforts and accomplishments of the organization. Users of this information include donors, volunteers, rating agencies, creditors and constituents of the NFP. A well-designed expense allocation system and corresponding statement of functional expenses is of utmost importance for successful reporting in the NFP environment.

This CPE course offers you detail-rich examples and case studies that will help you allocate costs and accurately prepare the statement of functional expenses.

Included in the course resources are various financial statement examples and common ratios used in analyzing NFP financial statements.

Learning Objectives
  1. When you complete this course, you will be able to:
  2. Determine how to prepare, in accordance with GAAP, a statement of functional expenses
  3. Identify the most appropriate statement presentation options, considering the complexity of the entity
  4. Determine the effect of a particular transaction on the reporting entity’s statement of functional expenses
Major Topics
  1. Financial statement preparation
  2. Expense allocation methodology
  3. Program and supporting activities
  4. Fundraising expenses
  5. Joint costs
  6. Voluntary health and welfare organizations
  7. Common errors and pitfalls
Professional Area of Focus
Accounting & Auditing
CPE Field of Study
Accounting (Governmental)
Who Should Attend
CPAs, financial professionals and NFP staff and board members looking to deepen their existing knowledge of NFP financial responsibility, and set themselves apart as a leader in this field.
Course Level
Knowledge of not-for-profit sector and experience working with basic financial statements.
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Statement of Functional Expenses: Not-for-Profit Financial Reporting