Are CD's Restricted?

In our ongoing series of Questions From the Boot Camps:

Q:
I was wondering if you would classify Certificates of Deposit as permanently restricted funds or if that is placed in a different category?

A:
CD's are a means of holding the money, like a checking account or a savings account. They are usually for a fixed amount of time, from 30 days on up to years I think. As a vehicle for holding money they would not fall not the category of restricted or unrestricted.

Now the money in the CD is a different story: as an example say you $100,000.00 to do a specific project over two years and you know that you won’t need $60,000.00 of that for the next 12 months. You could take that 60,000.00 and put it into a CD for 12 months and earn a higher rate of interest that it would typically accumulate just sitting in a checking account.

So the CD is not restricted but the money in it might be permanently restricted, unrestricted or temporarily restricted.

SAS 61 & 114, Communication with Audit Committees

I have mentioned the PPC guides (this one and this one especially) as valuable resources for any nonprofit's finance and accounting personnel. Their e-newsletters are also very good and I picked up this tid bit about a replacement SAS (Statement of Accounting Standards) that governs communication between the auditor and "those charged with governance" of the organization. The link in the title will take you too the article, here is an excerpt:

SAS No. 114, The Auditor's Communication With Those Charged With Governance, was recently issued by the ASB. The new SAS supersedes SAS No. 61, Communication with Audit Committees, and is effective for audits of financial statements for periods beginning on or after December 15, 2006 (generally, 2007 calendar year-end audits.)

The new SAS establishes standards for the matters required to be communicated by the auditor, the form and timing of that communication, and to whom the matters should be communicated. These new standards apply to all entities regardless of size, ownership, or organizational structure.

2007 Nonprofit Accounting Boot Camps

Some of our 2007 dates have been announced and you can register for them now. Sorry I was slow in getting the word out.

If a location near you is not announced yet, stay tuned for more boot camps to be announced this year.

Here are the two up now:

• Thursday, February 15 in Pasadena. Sponsored by the Flintridge Foundation. To register click here and look under the links for Brown Bag Discussions.
• Wednesday, April 18 in Monterey/Santa Cruz. Presented in association with the Community Foundation for Monterey County, the Community Foundation of Santa Cruz County and CAN Insurance Services: www.RegOnline.com/accountingbootcamp

See you there,
Alan