ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

(Department of Business Administration)

Course: Financial Accounting (5004)

Semester: Autumn 2019

Level: MSc Administrative Sciences

Assignment 2

Topic 6:
Accounting for Non-profit Organization
 Acknowledgements

Innumerable thanks to “The Almighty Allah”, the merciful and the source of all knowledge
and wisdom. Who bestowed upon me health, thoughts, talented teachers, opportunities and
power of communication and Darud on His Prophet Muhammad (SAW), who gave me
enough courage to complete this task.
Words are few in honor of Chairman, Department of Education, Allama Iqbal Open
University Islamabad, for his support and facilitation on the right time to complete my
research work.
I owe heartiest gratitude and deep sense of obligation to my supervisor, Allama Iqbal Open
University Islamabad for her consistent encouragement, constructive criticism, inspiring
guidance, ever friendly and loving attitude and immense cooperation at various stages
whenever I needed her guidance without which this piece of research would not have been
accomplished.
It is a great privilege for me in record my heartiest and my sincere thanks to my class fellows
for their energetic cooperation and help in this study. It is a great pleasure for me to record
my profound appreciation to my friends, who in true sense of words are a precious blessing
of Allah for me. I whole-heartedly acknowledge them for their sincerity, affection, support
and guidance.
Last but not least, I am grateful from core of my heart to my loving parents and their financial
and moral support who always pray for my health and brilliant future. I wish to thank to
everyone who helped me a lot to make this work reality.
 Table of contents

Acknowledgements....................................................................................................................2

An abstract.................................................................................................................................3

Table of contents........................................................................................................................4

1. Introduction to the topic......................................................................................................5

2. Practical study of the organization with respect to the topic..............................................7

3. Data Collection Methods....................................................................................................9

4. SWOT Analysis................................................................................................................10

5. Conclusions and recommendations..................................................................................11

6. References.........................................................................................................................13
1. Introduction to the topic
 2. Practical study of the organization with respect to the topic
.

1. Selected Organization

WWF launched a new strategy that harnesses the strengths of the WWF network in a shared
vision, focussing on six major goals - water, wildlife, the ocean, climate and energy, forests,
and food – and three key drivers of environmental problems – markets, finance and
governance.
 
In support of this strategy WWF undertook a redesign of its international secretariat that will
further unite WWF offices and its near 6,400 staff around the world. This will help WWF to
build stronger partnerships across the world with government, business, civil society and
individuals. Together, we will deliver on WWF’s ambitious goals.
We are recruiting the role of Financial Accountant – General Ledger for our International
Secretariat to help us achieve our new ambitious goals, and build a future where people live
in harmony with nature.
To ensure the effective management and control of finances through timely and accurate
financial planning, budgeting, accounting and reporting; to ensure compliance with Swiss
legal requirements as a result of head office location. To provide guidance and support to the
NET, the Network and Practice Leaders on finance related matters. Leads and steers the
Finance Community of Practice, and provides best practice guidance and specialist financial
support
to Network finance practitioners.
 To undertake a governance and oversight role and to highlight potential areas of
financial and broader risks, putting in place risk management strategies, and to
support management decision making though financial reporting and advice.
 Leads the financial accounting and reporting activities for the Functions, Practices and
Programme Office (“POs”), and sets the policies and procedures for the finance-
related operational processes to ensure an adequate financial control environment.
Produces the consolidated accounts for WWFI and POs for statutory reporting
purposes, and runs the
budgeting, forecasting and financial monitoring processes. Provides the systems and
systems support to the POs to facilitate financial accounting, reporting, control and
consolidation. Produces the consolidated budgets and forecasts of the POs to enable
Board oversight. Ensures strong governance, control, oversight and stewardship are in
place to enable risk management and mitigation. Manages the finance and operations
aspects of project finance.
 

The Role:
 Responsible for general ledger accounting and reporting relating to WWF
InternationalSecretariat in accordance with WWF accounting principles and reporting
schedules.
 Maintains and develops financial internal control process
 Has a key role in the financial consolidation of a portfolio of WWF Programme
Offices
 Global WWF International specialist for one or more Oracle E-Business Suite
modules andthe related processes. As global process owner, leads the development,
testing of newfeatures and upgrades, documentation, help-desk support, and training.

3. Data Collection Methods

Secondary data analysis is the analysis of data collected by another researcher or organization
in order to discuss or explore an issue (Hakim; 1989). Secondary data can helps to define the
research problems and can develop an approach, it is easy and quicker to access mostly
through university's library facilities as this data already been collected and published. This
data can be collected in short space of time and it is cost effective. For this research work I
will be using the journals, books, library resources and online databases to collect the data.
Primary data is normally regarded as being data which is collected by the original researcher
who is using the data for further investigation (Oliver; 2002 p.14. For this research it is
appropriate to use both techniques for data collection. Thus the study will employ primary
data as well as secondary data therefore I selected a mixed method approach

4. SWOT Analysis

Opportunities Threats
Strengths Strength Opportunities (SO) Strategies Strength Threats (ST) Strategies

Leveraging brand recognition in new Investing into R&D to thwart Organizational

segments Development industry disruptors.
Weaknesse Weakness Opportunities (WO) Weaknesses Threats (WT) Strategies
s Strategies
Get out of the business and focus on growth areas
Investing into customer oriented
services and supply chain

STRENGTHS OF WORLD WILDLIFE FUND US 

WHAT ARE "STRENGTHS" IN SWOT ANALYSIS?

Strengths are the firm's capabilities and resources that it can use to design, develop, and
sustain competitive advantage in the marketplace
- First mover advantage in the increasingly crowded market place. The new products are
rapidly increasing Wwf Wildlife market share in the Organizational Development industry.
- Strong brand recognition - Wwf Wildlife products have strong brand recognition in the
Organizational Development industry. This has enabled the company to charge a premium
compare to its competitors in Operations management, Social enterprise, Sustainability
industry.
- Brands catering to different customers segments within Operations management, Social
enterprise, Sustainability segment - Wwf Wildlife extensive product offerings have helped
the company to penetrate different customer segments in Organizational Development
segment. It has also helped the organization to diversify revenue streams.
- Diverse Revenue models - Over the years World Wildlife Fund US has ventured into
various businesses outside the Organizational Development sector. This has enabled the
company do develop a diversified revenue stream beyond Organizational Development sector
and Organizational Development segment.
- High margins compare to Organizational Development industry's competitors - Even though
Wwf Wildlife is facing downward pressure on profitability, compare to competitors it is still
racking in higher profit margins.
- Track record of innovation - Even though most players in the Organizational Development
strive to innovate, Wwf Wildlife has successful record at consumer driven innovation.
WEAKNESSES OF WORLD WILDLIFE FUND US 

WHAT ARE "WEAKNESSES" IN SWOT ANALYSIS?

Weaknesses in case study World Wildlife Fund US can either be absence of strengths or
resources of capabilities that are required but at present the organization doesn't have.
Managers have to be certain if the weakness is present because of lack of strategic planning
or as a result of strategic choice.
- Business Model of Wwf Wildlife can be easily imitated by the competitors in the
industryname industry. To overcome these challenges companyname needs to build a
platform model that can integrate suppliers, vendors and end users.
- Declining market share of Wwf Wildlife with increasing revenues - the Organizational
Development industry is growing faster than the company. In such a scenario Wwf Wildlife
has to carefully analyze the various trends within the Operations management, Social
enterprise, Sustainability sector and figure out what it needs to do to drive future growth.
- Low investments into Wwf Wildlife's customer oriented services - This can lead to
competitors gaining advantage in near future.
- Gross Margins and Operating Margins which could be improved and going forward may put
pressure on the Wwf Wildlife financial statement.
- Extra cost of building new supply chain and logistics network - Internet and Artificial
Intelligence has significantly altered the business model in the Operations management,
Social enterprise, Sustainability industry and given the decreasing significance of the dealer
network Wwf Wildlife has to build a new robust supply chain network. That can be
extremely expensive.
- Loyalty among suppliers is low - Based on the evidence provided in the case study World
Wildlife Fund US it seems that there is low level of allegiance among the members of supply
chain parteners.
OPPORTUNITIES - WORLD WILDLIFE FUND US

WHAT ARE "OPPORTUNITIES" IN SWOT ANALYSIS?

Opportunities are potential areas where the firm chan identify potential for - growth, profits,
and market share.
- Increasing customer base in lower segments - As customers have to migrate from un-
organized operators in the Operations management, Social enterprise, Sustainability industry
to licensed players. It will provide Wwf Wildlife an opportunity to penetrate entry level
market with a no-frill offering.
- Opportunities in Online Space - Increasing adoption of online services by customers will
also enable Wwf Wildlife to provide new offerings to the customers in Operations
management, Social enterprise, Sustainability industry.
- Increasing government regulations are making it difficult for un-organized players to
operate in the Operations management, Social enterprise, Sustainability industry. This can
provide Wwf Wildlife an opportunity to increase the customer base.
- Lower inflation rate - The low inflation rate bring more stability in the market, enable credit
at lower interest rate to the customers of Wwf Wildlife. This will increase the consumption of
Wwf Wildlife products.
- Customer preferences are fast changing - Driven by rising disposable incomes, easy access
to information, and fast adoption of technological products, customers today are more willing
to experiment / try new products in the market.
- Trend of customers migrating to higher end products - It represents great opportunity for
Wwf Wildlife, as the firm has strong brand recognition in the premium segment, customers
have experience with excellent customer services provided by Wwf Wildlife brands in the
lower segment. It can be a win-win for the company and provides an opportunity to increase
the profitability.
THEATS IN WORLD WILDLIFE FUND US CASE STUDY 

WHAT ARE "THREATS" IN SWOT ANALYSIS?

Threats are factors that can be potential dangers to the firm's business models because of
changes in macro economic factors and changing consumer perceptions. Threats can be
managed but not controlled.
- Changing political environment with US and China trade war, Brexit impacting European
Union, and overall instability in the middle east can impact Wwf Wildlife business both in
local market and in international market.
- Competitors catching up with the product development - Even though at present the Wwf
Wildlife is still leader in product innovation in the Organizational Development segment. It is
facing stiff challenges from international and local competitors.
- Commoditization of the product segment - The biggest challenge for Wwf Wildlife and
other players in the industry is the increasing commoditization of the products in Operations
management, Social enterprise, Sustainability industry.
- Competitive pressures - As the new product launch cycles are reducing in the Operations
management, Social enterprise, Sustainability industry. It has put additional competitive
pressures on players such as Wwf Wildlife. Given the large customer base, Wwf Wildlife
can't respond quickly to the needs of the niche markets that disruptors are focusing on.
- Saturation in urban market and stagnation in the rural markets - For World Wildlife Fund
US this trend is an ongoing challenge in the Organizational Development segment. One of
the reasons is that the adoption of products is slow in rural market. Secondly it is more costly
for World Wildlife Fund US to serve the rural customers than urban customers given the vast
distances and lack of infrastructure.
- Shortage of skilled human resources - Given the high turnover of employees and increasing
dependence on innovative solution, companyname can face skilled human resources
challenges in the near future.

5. Conclusions and recommendations

A nonprofit organization operates to fulfill a charitable, educational, religious, or scientific

purpose, rather than to earn profits. Although nonprofits do need revenue to operate, earning
profits is not their primary function.
Many nonprofits receive tax-exempt status. If you qualify for tax-exempt status, you are not
required to pay federal business income taxes. However, you might still need to pay state and
local income taxes. Not all nonprofits are tax exempt. Tax-exempt nonprofits are known as
501(c)(3) organizations.
Nonprofit accounting
Whether you’re thinking about starting a nonprofit or already have, understanding the unique
aspects of accounting for nonprofit organizations is essential.
1. Choose an accounting method
Like for-profit businesses, nonprofit bookkeeping relies on choosing an accounting method to
record incoming and outgoing money.
Like any business, your nonprofit needs a healthy cash flow to run. You need to earn enough
money to pay things like employee wages, unexpected expenses, utility bills, rent, etc.
Although you might not sell products like the typical business, you have many sources of
revenue. You might have members who pay dues or donors who contribute money. And, you
may host fundraising events to bring in revenue.
You must record all incoming revenue and outgoing payments with an organized accounting
system. You can choose a cash-basis or an accrual accounting system for nonprofit
organization.
Cash-basis accounting is a system where you record expenses or income when you actually
pay or receive them, not when the transaction takes place. For example, you run a nonprofit
where members must pay dues. Using the cash-basis accounting system, you record payment
when you actually receive dues from members. However, you cannot use this method if you
make more than $5 million in annual gross sales or more than $1 million in gross receipts for
inventory sales, or if you extend credit.
Accrual accounting is when you record transactions when they actually take place. This
method uses a double-entry bookkeeping system. If your nonprofit collects membership dues,
you would record income when you send the invoice, even though you haven’t physically
received money.
2. Understand tax responsibilities
If you apply and qualify for tax-exempt status, you do not need to pay federal income taxes.
And, you might also be exempt from sales and property taxes if you have tax-exempt status.
You must apply for tax-exempt status by filing Form 1023, Application for Recognition of
Exemption Under Section 501(c)(3) of the Internal Revenue Code. Then, the IRS will decide
if you qualify based on whether you are a “charitable” organization.
Being exempt from federal income taxes does not necessarily exempt you from filing an
annual small business tax return. You are still required to report revenue and expenses to the
IRS. Keep accurate records of and report your activities and finances for the year.
Unless you are not required to file a return (e.g., a church), you must file Form 990, Return of
Organization Exempt from Income Tax or Form 990-EZ. Your form is due on the 15th day of
the fifth month after your accounting period ends.
3. Create the appropriate financial statements
In nonprofit accounting, you should create financial statements to report your business’s
finances.
For-profit businesses use three main financial statements, which are income statements,
balance sheets, and cash flow statements. Nonprofit businesses use similar financial
statements, but they have different names and are organized differently.
Nonprofit accounting relies on using the statement of financial position (balance sheet),
statement of activities (income statement), and cash flow statement.
The statement of financial position gives you a screenshot of the health of your nonprofit
during a period of time. The statement shows your assets, liabilities, and net assets. Unlike
the balance sheet, the nonprofit version substitutes net assets for equity. Your net assets plus
liabilities must equal your assets on the statement of financial position.
Net assets are classified in one of two ways: with donor restrictions or without donor
restrictions. If donors make donations for specific purposes, you must label them as “with
donor restrictions.”

6. References
 "WWF in the 60s". World Wide Fund for Nature. Retrieved 19 August2012.
 In Memoriam: Godfrey A. Rockefeller, World Wildlife Fund, 29 January 2010.
 "WWF - Who We Are - History". Worldwildlife.org. Retrieved 19 August2012.
 "History | WWF". World Wildlife Fund. Retrieved 2019-01-22.
  "WWF conservation projects around the world".
 "WWF - Endangered Species Conservation". World Wildlife Fund. Retrieved 18
April 2018.
  "How is WWF run?". Retrieved 21 July 2011.
 WWFN-International Annual Review (PDF). World Wide Fund for Nature. 2014.
p. 37. Retrieved 17 September 2015.
 ^ "WWF's Mission, Guiding Principles and Goals". WWF. Archived from the original
on 2019-01-13. Retrieved 2019-01-13.
 Warren, Tom; Baker, Katie J. M. "WWF Funds Guards Who Have Tortured And
Killed People". www.buzzfeednews.com. Retrieved 2019-03-04.
 "Nepali park officials tortured a man to death. Then, the government and the World
Wide Fund for Nature rewarded them". kathmandupost.ekantipur.com.
Retrieved 2019-03-05.
 Baker, Katie J. M.; Warren, Tom. "Internal Report Shows WWF Was Warned Years
Ago Of "Frightening" Abuses". www.buzzfeednews.com. Retrieved 2019-03-06.
 International, Survival. "Survival International responds to latest Buzzfeed - WWF
revelations". www.survivalinternational.org. Retrieved 2019-03-06.
 Paehlke, Robert C (2013). Conservation and Environmentalism: An Encyclopedia.
Routledge. p. 280.
 Kate Kellaway (7 November 2010). How the Observer brought the WWF into
being The Observer.
 Scott, P. (1965). The launching of a new ark: first report of the President and Trustees
of the World Wildlife Fund, an international foundation for saving the world's wildlife
and wild places; 1962-1965 (Collins).
 ^ "History - WWF". World Wildlife Fund.
 ^ "History: Fifty Years of Environmental Conservation". With link to PDF of
"Morges Manisto". Worldwide Fund for Nature. wwf.panda.org. Retrieved 20 June
2017.