ISEN-ASTC-L is a service of the Association of Science-Technology Centers
Incorporated, a worldwide network of science museums and related institutions.
*****************************************************************************

/accountant hat on/

This has nothing to do with accrual basis.  Accrual based accounting
means recognizing revenue or expense when it is "encumbered" or
committed.  In the for profit world, this means revenue is recognized
as an asset (a receivable) when the bill is produced, and expenses (a
payable) when the PO is entered.  When the actual cash changes hands,
the receivable asset turns into a cash asset, and the payable reduces
the cash assets.

Your accountant sounds like he is trying to deal with membership as a
restricted grant, which under GAAP of like 15 years ago, you only
recognize as it is expended.  GAAP has since changed dramatically, and
grants are now booked as income when you are notified, and some other
specific NFP entries are made as the cash is received (my detail gets
fuzzy here, as I haven't done accounting for 20 years).   It sounds
like your accountant is being what s/he thinks of as conservative.  But
he is misguided.  Not only is what he is doing not standard practice in
museums, it is not GAAP, and wouldn't be even if somehow memberships
were construed as restricted grants.

How do you get him to stop?  If you could ask him to show you the
relevant IRS guidelines or GAAP guidelines, that might make him review
the relevant literature and change his position.  I could be wrong or
behind the times on this, but I don't think he is going to be able to
find anything to support his position.

HTH.

/accountant hat off/

Eric Siegel
Director, Planning & Program Development
New York Hall of Science



On Mar 26, 2004, at 10:27 AM, Ed Sobey wrote:

> ISEN-ASTC-L is a service of the Association of Science-Technology
> Centers
> Incorporated, a worldwide network of science museums and related
> institutions.
> ***********************************************************************
> ******
>
> This is a fairly common practice (accuring membership income) and
> accountants generally favor it.  However, for small museums where
> memberships often come in as the result of an annual drive or annual
> re-newal it makes sense to keep membership on a cash basis.  You more
> fairly represent the true nature of your business by showing the
> seasonal nature of membership income and expenses.  Your accountant
> may disagree, but I think the cash basis is preferable - for at least
> smaller museums.
>
>                    Ed Sobey
>
>
>>
>> From: mike katz <[log in to unmask]>
>> Date: 2004/03/26 Fri PM 03:15:06 GMT
>> To: [log in to unmask]
>> Subject: Membership Fees and Accounting Nightmares
>>
>> ISEN-ASTC-L is a service of the Association of Science-Technology
>> Centers
>> Incorporated, a worldwide network of science museums and related
>> institutions.
>> **********************************************************************
>> *******
>>
>> Gotta love the accountants.
>> I've never heard of spreading the income from membership gifts over
>> 12 months. This is
>> not a rental agreement, this is an unrestricted donation. We count
>> all of our donations,
>> including membership gifts at all levels,  at the time they are
>> received. Even if we
>> didn't have a building, we'd have memberships; the fact that they
>> expire in 6 months or
>> 12 months is just so that we can ask them for another donation at
>> least once a year. I
>> would challenge your accountants to show you a local art museum,
>> historical society, or
>> SPCA that spreads membership out over 12 months. (maybe health clubs
>> do this, but not
>> museums).
>>
>> As far as exhibits go, we do capitalize them as assets and depreciate
>> them over time.
>> They have a cost and a value. I think you can be  conservative or
>> liberal in assigning
>> value (for example, what does staff time actually cost?) but be
>> consistent.
>> Mike
>>
>> ps -- of course I am not an accountant, don't work for the IRS, will
>> not accompany you in
>> front of your board, yadda yadda yadda.
>> *********************************************************
>> Michael Katz,  Director of Marketing and Development, Sciencenter
>>    Ithaca, N.Y.  (607)272-0600  Ext 18.
>> http://www.sciencenterexhibits.org
>>
>> The Sciencenter mission is to inspire people of all ages and
>> backgrounds to discover the excitement of science through
>> programs and exhibits that promote learning through interaction.
>>
>> **********************************************************************
>> *
>> More information about the Informal Science Education Network and the
>> Association of Science-Technology Centers may be found at
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>
> ***********************************************************************
> More information about the Informal Science Education Network and the
> Association of Science-Technology Centers may be found at
> http://www.astc.org.
> To remove your e-mail address from the ISEN-ASTC-L list, send the
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