Accounting is a career choice that spans many different industries. For budgeting and compliance purposes, organizations of all kinds need these professionals to keep them on track. According to the U.S. Bureau of Labor Statistics, the demand for accountants is projected to rise 10 percent from 2016 to 2026, at a faster rate than the average career. This trend shows that now is a great time to improve your skills as an accountant. If you’re not interested in working in a for-profit corporate environment, you might find it rewarding to become an accountant for nonprofit and government agencies. The University of Alabama at Birmingham’s MAc program offers a course, Governmental and Not-for-Profit Accounting, that can help you learn about how these industries oversee their funds.
This Master of Accounting core requirement allows students to explore how the field of accounting can contribute to not-for-profit (NFP) and government industries. This course aims to introduce students to different concepts that are specific to these sectors. Students can also learn how to conduct financial reporting that is compliant with Financial Accounting Standards Board regulations. Here is a brief summary of the essentials of accounting for governmental and not-for-profit organizations:
Accounting and auditing regulations are different for nonprofit organizations than they are for for-profit companies. Most notably, while for-profit corporations are subject to federal income taxes, NFPs may apply to be exempt from income taxes with the Internal Revenue Service.
In addition, many of the financial statements that nonprofit organizations handle are different from those kept by for-profit companies. NFPs handle certain documents that are similar to those that for-profits compile. For example, a for-profit’s balance sheet is similar to a nonprofit’s statement of financial position. The major financial reporting documents that NFPs handle include:
- Statement of financial position
- Statement of activities
- Statement of functional expenses
- Statement of cash flows
- General ledger
- Notes to financial statements
One particularly insightful component of the nonprofit financial reporting process is the organization of assets with and without donor restrictions. For instance, if someone donates to a nonprofit and requests that the NFP spends this money on one specific area, this contributes to the net assets with donor restrictions.
The IRS also requires many tax-exempt nonprofits to file Form 990, Return of Organization Exempt from Income Tax, every year. After the nonprofit files this information, the Form 990 becomes public information. Potential donors can obtain these financial insights before donating to the organization. Churches and certain other exempt NFPs are not required to file a Form 990.
Public sector organizations also use separate financial reporting tools than traditional corporate, for-profit companies. Government accounting is generally defined by the process of fund accounting, a system of reporting that categorizes funds based on their designation and source. The seven different types of financial statements that state and local governments must use for reporting include:
- Outflows of resources
- Inflows of resources
- Deferred outflows of resources
- Deferred inflows of resources
- Net position
You might have an understanding of some of these common terms associated with government accounting, as they are often used in traditional corporate accounting. Assets are the resources the government system currently has access to, while liabilities are the obligations to surrender assets. The outflows and inflows of resources refer to the consumption and acquisition of resources (assets). Deferred inflows and outflows are the government’s absorption and use of these products that are applicable to a future reporting date. Finally, the net position refers to what remains after the government takes the other factors into account. Organizations can find their net position by completing this equation reported by the Government Finance Officers Association:
(Assets + deferred outflows of resources) – (liabilities + deferred inflows of resources) = net position
The U.S. government also uses grant accountants to perform many of the sector’s auditing initiatives. These professionals work to ensure that government grants, loans, insurance programs, food commodities, and other reimbursements are in compliance with how recipients are using them.
Other notable courses
If you are interested in working as an accountant in the nonprofit or government sector, or plan on providing third-party auditing services for businesses in these industries, you can benefit from taking government and nonprofit accounting courses online. Here are a few other courses of interest that relate to these sectors:
The online MAc program at the University of Alabama at Birmingham requires a course that examines the taxation processes in the U.S. This course provides a deep dive into the Internal Revenue Code and Regulations, which ensures businesses in all industries are compliant with national standards. The course also provides students with useful tax planning strategies that they can implement in their own careers.
How does this impact the nonprofit sector? Taking a course about different forms of tax regulations is particular useful for NFPs that are not tax-exempt.
UAB’s accounting master’s program encourages students to take electives in courses that may benefit them in their career pursuits. If you plan on immersing yourself in the government and nonprofit sector, you may benefit from cost accounting. This course will run you through the basic practices of cost determination, analysis, and control. Some of the other topics this course will cover include budgeting, overhead, and standard costs, all of which are common quantitative principles in the government and NFP industries.
Become a master of compliance with a MAc
You can gain a vast amount of information about government and NFP accounting when you enroll in the University of Alabama at Birmingham’s online master’s in accounting. UAB’s Collat School of Business is a top graduate business program that holds multiple rankings for its success in online education. The online MAc program is held in an asynchronous format, allowing students to study and complete coursework on their own time. For that reason, this program is an excellent option for students who need to balance their advanced degree studies with their own personal duties, like full-time jobs or parenting responsibilities.
UAB’s MAc program provides the right blend of foundational finance studies and cutting-edge accounting courses that focus on different forms of the practice, including accounting for government, nonprofit, and corporation. The enriching lessons you will take as an online MAc student can help you prepare to study for the CPA exam and begin your lucrative, rewarding career as an accountant.