Q1. What is “Fund Accounting”
A. In previous years, we have used the term “equity” when referring to the bottom section of the Balance Sheet. However, the correct term is “Fund balances” or “Net Assets.” This simple change of wording has big implications. The Fund Balances make visible the level of support that is available for various types of activity.
Q2. What is the difference between “liabilities” and “fund balances?
A. Liabilities are debts to external organizations, while “fund balances” represent commitments we have made internally. In 2011, we reclassified several liability accounts into funds so the Balance Sheet would give a clearer picture.
Q3. What is a “restricted fund”?
A. There are two types of funds. Our “general fund” is unrestricted, and we determine the policy governing its use. The other funds are restricted, which means that there are conditions attached to their use – e.g. the terms in a will.
Q4. What are “extraordinary” items?
A. Extraordinary items are material items that are unusual in nature and occur infrequently. Both characteristics must exist for an item to be classified as an extraordinary item on the income statement.
Q5. What is an audit?
There are 3 types of Accountant Engagement: Compilation, Review, and a formal Audit. Currently, we ask our accountant to do a “Compilation” to create our Financial Statements each year. Members are asked to approve these Financial Statements. (Members should be aware that we are not complying with the by-law, which calls for an annual “audit”.)
Q6. Why don’t we get an audit?
A. It is true that this would give a sampling, but not every transactions is reviewed and this still does not necessarily detect fraud and all errors and omissions. An audit is also very expensive(~$20,000), and is probably not the best use of our money.
Q7. How do we invest our assets?
We invest our money at DUCA credit Union which does ethical investments. Our main 5-year term deposit is coming due in July, and interest rate upon renewal will be much lower. However, the Council is not planning any significant changes in strategy at this time.
Q8. Are our donations to the Goetheanum tax-receiptable?
A. Yes. We have an Agency Agreement with the CRA which ensures that these donations are compliant. At present, the donated funds are being used to support the English-language study programs at the Goetheanum. Click here to read the agreement (See Question 8.).