ACCA - F1 ACCOUNTANT IN BUSINESS
ACCA F5 - Performance Management
Either
a small community charitable trust or association of professionals/environmentalist
or association of member states founded for specific purpose like WTO or
international organisations devoted to fight against poverty and natural
calamities or one established to protect fundamental human rights, all these
different types of institutions fit within not-for-profit. Objectives of not
for profit include social, philanthropic, cultural and environmental issues.
(NFP)
Not-for-profit organisations do make profit but does not (make the money available)
distribute to increase the wealth for its members. The profit earned and
donation received is used to accomplish its stated mission. Profit generated is
recognised as surplus and is retained as further source of capital. Normally,
they are registered as tax-exempt organisations in state tax authority.
Cost
accounting perspective: The quantitative nature of money (in form of grant and
donation) and the qualitative nature of the (goods/services) benefit offered to
members or targeted societies/individuals with intention to maximise the
benefit to final users/receiver within limited resources available creates
challenging cost environment for NFP's. I.e. NFP needs to target (value for
money) VFM accounting through benchmarking, performance indicators, 4E's
(Economy - resource utilization, Efficiency - process improvement,
Effectiveness - output measurement and Expedition/Timely - information) and
value audit.
Human resource in not-for profit is even more
complex issue. Large number of volunteer staff at operational level increases
turnover rate and curb managerial power to dismiss poor performing staffs.
Organisations should address non-financial motivational needs of operating
staffs in order to retain them for long term.
Conflict
of interest between multiple stakeholders of NFP is a common issue. This
creates barriers in performance appraisal and tension in resolving conflicts.
Organisations involved in conflict adopt conflict management strategy. Cyert
and March conflict resolving strategy involves - prioritization,
negotiation/satisfying, sequential attention, side payments and exercise of
power. However, the later two (side payments and exercise of power) are not
suitable for NFP's.
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