Abstract
This report discusses the financial reporting policies and financial condition of Catholic Charities Archdiocese Houston-Galveston, a large nonprofit human services organization. In the analysis, the performance of critical accounting processes, financial statements, allocations of expenditure, assets and liabilities, debt levels as well as revenue is investigated. The transactions are recorded in terms of standard nonprofit accounting principles so that they can be summarized and consolidated into quarterly and annual statements that incorporate data across divisions. All donations, grants, and contracts are recorded using either restricted or unrestricted funds to ensure transparency on how donated money is used. Audited statements in the last fiscal year have reflected $33.3 million in revenue from both government and private grants and contributions, along with $30 million in program-related expenses, implying an 8.9% debt ratio that is relatively low. Multi-year assessment suggests stable, varied funding streams that will result in a proportion of human services as opposed to administrator costs. Appropriately, low liabilities and relatively stable pandemic-level revenues indicate the accumulative evidence of financial stability present in the current situation. Recommended actions that will help continue to communicate the finances and promote balanced growth include regular audits, real-time metrics available on dashboard platforms, as well as working with accountants/investment advisors on expansion plans. Improved analysis can provide the means to turn leadership decisions into vital services sustained and expanded by Catholic Charities throughout the greater Houston area and focused on the needs of vulnerable populations. The audit provides a broad view of the value of smart financial management and has been used as a strategic tool to advance and back up this organization’s critical mission in the community.
Introduction
Catholic Charities Archdiocese Houston-Galveston is a big nonprofit organization that engages in providing human services that are essential for the performance and impact of the community and appropriate strategies and financial posture have a major impact. A general approach to the financial management of this institution will be discussed in light of the analysis of the chosen accounting strategies measures, financial reporting statements and indicators of fiscal stability will form a good basis for analysis. The analysis of the testing provides us with an insight into where the financial data is created, and how it can be used for decision-making throughout the entire enterprise. Investigation demonstrates stagnant dynamic finances that have the chance of enhancing in terms of transparency, growth plan, and partnering with professional advisory firms.
Accounting Processes
As a big nonprofit human services organization operating in the Houston-Galveston region of the US economy, its agencies employ standard accounting principles and practices to fully capture all transactions under which they run for the production of financial statements that reflect true and full accounts of money (Sterns & Atwater, 2020). These include large-scale processes like double-entry accounting which is an accounting method where every single transaction is recorded in at least two accounts to achieve accuracy and prevent erroneous errors. This financial data is comprehensive and has been recorded from various parts of Catholic Charities divisions and programs such as refugee resettlement, rental assistance, homelessness prevention, counseling services, senior services, and youth support among other programs. The organization’s finance department collects this financial information from various programs and divisions, although discreetly consolidates these figures before the quarterly and annual financial statements (Archdiocese of Galveston-Houston, 2021). Other major summaries are quarterly or annual statements that depict information budget, revenues and expenditures, assets/liabilities, equity, and essential key transactions over the reviewed period. Moreover, the annual auditing by a certified public accountant is not the only sign of full validation: it also should be accompanied by the observance of accounting regulations and practices throughout.
Funds and Financial Reports
Classification of funds for Catholic Charities Archdiocese Houston-Galveston is done as a nonprofit organization where the fund is divided into two categories – Restricted or unrestricted to simplify financial tracking and reporting (Archdiocese of Galveston-Houston, 2021). Whereas restricted funds are provided by specific external sources including government and private grants as well as donor contributions or service contracts that designate or restrict funding for purposes of specific programs or services. On the other hand, unencumbered money may be used within the whole organization for free, based on decisions made by leadership. Frequently tracking these various fund types, as well as updating the precise uses of the fund’s restricted type enables more transparency and accountability to donors, funders, regulators, and other stakeholders. Catholic Charities also provides extensive annual financial reports that include specific line-item details on the cost of each important program area, administrative and fundraising overheads, current liquid and borrowed assets/liabilities totals, revenue sources by volume, as well as budget/projection targets for expenses. Apart from that, Form 990 nonprofit tax report filed on an annual basis provides other relevant financial, income, and staff salary information – a legislative measure to ensure public accountability for nonprofit organizations.
Financial Statements
Therefore, one of the significant qualifications elicited by the financial statements analysis of Catholic Charities’ recent audited statements is overall fiscal strength. FY2020 statements declare the revenues total: of 33.3 mil. for mostly grants “government/private (47,6%) and past “donor contributions (33.4%) (Archdiocese of Galveston-Houston, 2021). The revenues decreased 2% below one year off; it is worth mentioning that this happened under the pandemic conditions. Stations also define the most significant part of their net assets worth close to $60 million which manifest themselves through real estate and machinery as well as investments. In terms of spending, most or 82.2 percent of costs were dedicated to human services programs by themselves, an alignment with the nonprofit ideal to reduce the amount that is spent on administration (Andrasik et al., 2020).
Fiscal Health Assessment
When examining fiscal balance, Catholic Charities shows gradually increasing revenue streams spanned over various sources with a consistent share of total expenditures across all forms of long-term debts minimal. The current debt ratio is 8.9%, a relatively low figure for an organization of such size (Archdiocese of Galveston-Houston, 2021). Revenue/expenditure figures over the last three years stood approximately at $33 million and $30 million each year. Although the pandemic resulted in a slight dip in 2020 revenue, overall, the organization demonstrated resilience and adaptability through enhanced fundraising that continued to generate constant cash flow (Archdiocese of Galveston-Houston, 2021). Going forward, the entity is still well-placed to benefit from cost pressures through its resources to cover expenses.
Communication and Collaboration
To accurately and reliably convey its overall financial standing and performance, Catholic Charities Archdiocese Houston-Galveston submits substantial financial data and analysis into several critical external and internal stakeholder groups. The main stakeholders may include key donors, grant funders from government or foundations, the Archdiocese and its collaborative partners, state and/or local financial regulators, and the community at large. It is therefore more effective for an institution to communicate this financial information transpiring outwards thereby enhancing public transparency and accountability when it comes to the use of funds, fiscal responsibility, and data-driven decision-making. Particularly, specific external reporting practices include consolidated annual financial statements posted on the website of the organization as well as statutorily required public Form 990 nonprofit tax filings. Financial statements, budgets, and multi-year trends are closely monitored at least quarterly internally by leadership as well as the governing Board Of Directors to inform strategic plans for growth. Continuing in the direction of optimizing long-term finances, Catholic Charities could conduct periodic independent financial audits, update the real-time public and interactive dashboards with key metrics, and work with accounting, tax, investment, and legal professionals to provide experienced consultation on identifying and responsibly implementing growth opportunities involving facilities, infrastructure, programs, and services, community partnerships assets investments expansion, etc.
Conclusion
Finally, Catholic Charities Archdiocese Houston-Galveston can be said to show international good fiscal discipline and stability. Utilize the accepted approaches in accounting that are based on financial reporting for data-driven adjustment and adaptation even during such unprecedented times as a pandemic. The sound management of revenue streams, expenses, assets, and liabilities has resulted in efficient cash flow and the least long-term debt. With the organization’s attempt to widen the community services, some recommendations like more frequent auditing, public financial dashboards, and working with the staff of professional tax and finance experts might support successful growth. The better financial analysis and planning, this very important regional institution will be able to meet the challenges of an evolving market of nonprofit entities.
References
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