I am proposing new changes to the accounting reporting system for non profits, in order to ensure honest reporting. Every year many non profits as required by the current accounting guidelines as well as the IRS to breakdown their figures between "function" expense categories i.e. program, fund raising, management and operating costs.
What if this was eliminated? Would the reporting be more accurate without having to manipulate figures in order to show certain "positive" trends and avoid over inflation of certain categories. Would this avoid the need to manipulate time sheets and work logs after the fact so as to avoid showing the correct picture but rather a rosier one? Would managers be more honest in the reporting of their time to actually show the true picture and not the intended one?
Would the non-profits invest more in areas that increase the efficiency while still focusing more on their mission? Do non-profits have to work with outdated computers and telephones because they cannot invest more in operating expenses since many donors are providing more restricted resources?
We should be more focused on the results and not categories. We need to device methods to measure success as well as promote honest ethical behavior. We should be more creative in our mission work as non profits and be measured not on how we categorize our expenses, but rather on the impact we have had using the resources provided.
May be, this way we would be more honest in our financial reporting, more creative in our mission work and also efficient. New reporting guidelines that are not fixed on "function" but rather on disclosures would be a great start to more honest reporting. This is my proposal, if this will provide honesty during reporting. Should this be the way that non-profits prefer should be embracing themselves for?
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