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Some ideas (or examples or FAQs) of what the disclosures and/or notes
should disclose (which, in general, is ANYTHING that is needed to explain
something that without such explanation would cause the reader to be
misinformed, such as):
 | 1-if there is a mismatch of receipts and expenditures between years |
| 2-if there is a receipt or expenditure that will be received or paid in
a future year and which, if it were paid this year, would be something that
is significantly different |
| 3-disclosure of any restrictions on your organization (for long-term leases, or endowment fund usage, or anything else under which you must operate). |
| 4-if there is virtually anything that a well-informed reader should
know about your organization and its financial statements that, without
which, he or she might make a decision that is incorrect. |
| 5-consistency, so that each of the comparative columns are stated on a
basis consistent with those both before and after. |
Some further explanation of the above follows:
1-if there is a mismatch of receipts and expenditures between years
- this might be, as an example, where you are sponsoring a fund-raising event
that takes place in (say) January of the next year, and you have made some (but
significantly less than all) of the expenditures that you will finally make,
and/or you have received as prepayments for tickets (or other receipts) for the
event some (but, again, less than all) of the receipts that you will eventually
receive. By the time the event takes place in the next year you will have
sufficient information to state something like "additional receipts for the
(event) which took place in late January (year) amounted to ----- pesos and
additional expenditures of ----- pesos were also spent. The final net
income for this (event) amounted to --------- pesos."
2-if there is a receipt or expenditure that will be received or paid in
a future year and which, if it were paid this year, would be something that is
significantly different - this might, as an example, be something like
"We have entered into a contract with our executive vice president wherein
at his retirement, now expected to be within four years, it is estimated that he
will receive an annual pension of ------- pesos thereafter".
3-after the Founder's death, your organization will receive a significant Endowment Fund that is restricted in a number of ways, among them is that it must be kept segregated from all other funds, that only the income each year from that fund may be used in your mission, and that under certain requirements of the Michael Wein Trust Agreement, these endowment funds might have to be transferred to other organizations if (our organization's
name) does not meet or better the specific requirements for transparency and continuity as stated on the http://www.mpwcf.org/founders_will.htm webpage at points d and e.
4-if there is virtually anything that a well-informed reader should
know about your organization and its financial statements that, without which,
he or she might make a decision that is incorrect. This could be something
like any of the following:
| a -a note is required to correct the visual facts that the receipts and
expenditures are mismatched insofar as either one occurred in one year and
the other will occur in a later year. |
| b- if a "cash-basis" financial statement misrepresents the
proper matching of costs and revenues, a note is required. For
instance, if your organizations has incurred significant unpaid liabilities
for goods or services received but have yet to be paid for, a note to that
effect is warranted. |
| c-if some transaction that is quite minor in 3 or the 4 columns, is
significant in one column, an explanation should be presented. This
might also be necessary if a significant variation between one year
(budgeted or actual) and another has occurred , or is expected to occur. |
| d-if some category of receipt or expenditure becomes significant, a
separate line should be provided for such a category. |
| e-quantitative mission information should be disclosed on a comparitive
(4-column) basis. As a few examples, XX meals served at YY
schools, AA computers placed in BB schools, CC (type of) scholarships to bb
boys and gg girls for hh highschool or uu university , DD
houses completed to date with EE houses completed this year (also show
4-column comparitive cost per house) and FF houses
started this year (family size might also be disclosed), GG persons tested
for eye problems and HH (one solution) and II (another solution) for eye
problems, JJ girls and
LL boys were given MM type of housing or care, etc., etc., etc., etc., etc. Obviously,
XX, YY, AA, etc., are placeholders for the quantity and other
descriptive information. And
obviously, you know your organization better so the above examples are
merely starting points for such disclosures. |
| f-comparative ratios (i.e, for each of the four comparative columns)
should be disclosed and include the ratio of mission expenses to total
expenditures (but not to total receipts) and the ratio of overhead expenses to
total expenditures - therefore, in the 4-column presentation, any trend is thereby disclosed. |
| g-the entire purpose of all of this is to promote transparency and remove
secret plans that should otherwise be disclosed. For example, if you
receive or pay funds in both usDollars and MexPesos, you should disclose
your basis for recognizing gains or losses from conversions. Or, if
you have invested cash, the maturity and yield is important information. We believe that you
will agree than non-profit
organizations should hide few, if any, of their actions from any of their
constituencies. |
5-consistency is required - for example, if you included XX-type of
either receipts or expenditure in a descriptive caption in one column in a prior
year, and for some reason now include it in a different descriptive caption, the
prior year(s) should be conformed to the present year(s) AND a disclosure note
should explain what you are doing, why you did it, and the amount(s) involved in
each year.
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