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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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