Girl Scout, FASB Statement No.117 Responsibilities, and Excess
Benefits Impacts
The Girl Scout is a youth
organization for girls with a global following of approximately 2.6 million
adherents, which bases its leadership on the values stated in an acronym of the
word G.I.R.L which means Go-getter, Innovator, Risk-taker, and Leader (Girl
Scouts, 2018). The organization goes back to 1912 when it was founded by the
Gordon ‘Daisy' Low (Girl Scouts, 2018). In the same year the founder started
the first Girl Scout troop, the organization has grown by leaps and [G1] bounds
ever since and now has followers spread out all across the globe. Through its
teachings that are based on the original guidance of the founders, the
organization offers an opportunity to every girl in practicing a lifetime of
leadership, success, and adventure. The organization’s mission is building
courage, confidence, and character with the goal of making the world a better
place (Girl Scouts, 2018).[G2]
Girl Scout’s Financial Statements
Conformity to Financial Accounting Standards Board (FASB) Statement No. 117
Statement No. 117 lays out the
standards that are required of not-for-profit organizations when it comes to
external financial statements. The main objective is to boost the understanding
of such statement, make them relevant, and also ease comparative analyses of the
financial statements that are provided by the given organization (FASB, n.d).
Statement No. 117 lays out the rules on what is to be included in the financial
statement. All not-for-profit organizations are required to give a statement of
financial position; they should lay out a statement of their activities, and
the cash flows (FASB, n.d). Additionally, the said organizations are required
to give details on the total assets, liabilities, net assets which are covered
under the statement of activities, and also the changes that it gets in cash
and their equivalents in the cash flow statements. The statement also requires
that the organizations classify their net assets, revenues, losses, and profits
(FASB, n.d).
The Girl Scout has an annual report
that it releases in line with the FASB Statement No.117 requirements. In the
report, the organization lays out the figure related to its assets which cover
the cash and cash equivalents, the liabilities and net assets which includes
parameters such as accounts payable and accrued liabilities (Girl Scouts,
2016). Under the net assets, it lists the unrestricted asset figures and the
restricted both in the temporary and permanently restricted ones. Still, in
line with the requirements of Statement No 117, the organization outlines
consolidated statement of activities which comprises of the operating revenues,
the expenses, and the non-operating revenue gains and losses figures (Girl
Scouts, 2016).[G3] [G4] [G5]
Girl Scouts Reports of Pledges and
Contributions in Comparison to Exchange Transactions and how they should they
be Recorded and Reported in Financial statements
Girl Scout has a target of
accumulating $1 billion by 2020 and to achieve that goal it has relied on donor
support which has come in form of pledges and donations (Girl Scouts, 2016). To
report the progress the organization has split figures that have so far been
received into annual amounts received. It has also outlined the donors
according to the ranking of the amount given within the respective years,
listing those that gave $25,000 and above (Girl Scouts, 2016). Unlike the
reports in the financial sections, the contributions and pledges are a bit
vague and lack the specificity especially when it comes to small donor funds
provided. The annual [G6] [G7] cumulative also lack details on the sources.[G8]
[G9] [G10]
Statement No. 117 clearly outlines
the rules on what is to be included in the financial statement and requirements
for displaying the sources. It requires that the entities give clear reports on
all the contributions, reports, and details of exchange transactions (FASB,
n.d). These details are captured in the given organizations statement of
financial position; which is laid out as a statement of their activities, and
the cash flows (FASB, n.d). It should lay out the statement of activities, and
also the changes that it gets in cash and their equivalents in the cash flow
statements. The statement also requires that the organizations classify their net
assets, revenues, losses, and profits (FASB, n.d). The amounts of the assets
are to be laid out in the statement of financial position into categories of
permanently restricted, temporarily restricted, and unrestricted
Impact of Conferring Excess Economic
Benefits by Not-for-Profit on Disqualified Persons
Tax-exempt organizations such as the
educational, religious, the not-for-profit organization are required to have
caution when it comes to the compensation of their staff. They are required to
be careful that they do not end up giving excess benefits to people who are
deemed under the law as insiders. The law defines insiders as the individuals
who are in a position that they can wield significant influence on the workings
of a given organization ([G11] Smith, 2011). They may include the members of
top management and executives and also those that have voting powers on the
board. Other related parties such as families also fall into [G12] [G13] the
categories. [G14] The ones that have control of more than 35 percent in the
given company (Smith, 2011). Additionally, a company can be treated also as an
insider when they have control like in the case of management companies and
have the capability to control the management of the organization's daily operations.
Those individuals receiving compensation that is unwarranted, or in other
circumstances low-interest loans, and sometimes making payment to the
organization at a lower amount than the market rates. [G15] [G16]
The penalty may take the form of intermediate
sanctions, which may be issued by the government to the individuals that
involve in such malpractices, the same goes for those in management that
approve such excess benefits with the full knowledge of the practices. The
intermediate sanctions can be in the form of federal excise taxes which are
imposed on a personal liability. The sanction is made up of excise taxes that
are equal to 25 percent of the extra benefits ([G17] Smith, 2011). The insider
is the one who is held responsible for the payment of the said tax and also the
payment of the excess benefits to the respective organization. Any delays or
failure in payment may draw an additional tax in the second year which may go
to the extent of 200 percent extra benefit (Smith, 2011). Apart from the
personal impacts, it can extend to the organization which risks receiving
negative publicity, and in extreme circumstances even lose the donor funding
from the private donors and the public at large. [G18] [G19]
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