Case Study: Not-for-Profit Organizations The National Institute for Vocational Education and Imam Malik College both are offering education on non-profit bases. They generate fund from donations and charity organizations plus rendering limited services and consultancy and charge small fees to cover basic expenditure. Presented below are financial statements (except cash flows) for two not-for-profit organizations. Neither organization has any permanently restricted net assets, which are registered under the names of main donators. Statement of Activities for the Year Ended December 31, 2019 Imam Malik College The National Institute for Vocational Education Unrestricted Temporarily Unrestricted Temporarily Restricted Restricted Revenues Program service revenue 2,595,000 1,250,000 Contribution revenues 6,327,500 750,000 4,200,000 Grant revenue 96,000 1,025,000 Net gains on endowment investments 17.500 Net assets released from restriction Satisfaction of program restrictions 450,000 (450,000 377,000 (377,000 Total revenues 2,390,000 396,000 5,827,000 648,000 Expenses Education program expenses 3,621,000 1,559,000 Research program c pense 1,256,000 2,256,000 Total program service expenses 6,877,000 3,815,000 Fund-raising 456,000 356,000 Administration 650.000 1,229,000 Total supporting service expenses 1.106,000 1,585,000 Total expenses 7.983.000 3,400,000 Increase in net assets 1.407,000 396,000 427,000 648,000 Net assets January 1 4,208,000 759,000 1,037,500 320,000 Net assets December 31 3,615,000 1,155,000 1.464.500 968,000 The National Institute for Vocational Education 256,000 99,000 150,000 88,500 593,500 STATEMENT OF NET ASSETS, As At December 31, 2019 Imam Malik College Current assets Cash 105,000 Short-term investments 265,000 Supplies inventories 32.000 Receivables 239,500 Total current assets 641,500 Noncurrent assets Pledges receivable 465,000 Long-term investments 2,590,000 Land, buildings, and equipment (net) 3,275,000 Total Doncurrent assets 6,330,000 Total assets 6,971,500 Current liabilities Accounts payable 23,000 Total current liabilities 23,000 Noncurrent liabilities Notes payable 178,500 Total noncurrent liabilities 178,500 Total liabilities 201.500 1.968,000 1,968,000 2,561,500 129,000 129,000 129,000 Required: 1. Calculate the ratios that support the following requirements for both institutions: A. Ability to meet operating expenses from the unrestricted net assets. B. Efficiency of external fund-raising. C. Ability to meet short term obligations. D. Assessment of the financial position. E The level of program expenditure and efficiency. F. Ability to raise and pay debt. G. Explain the self-finance ability of each program. 2. Based on answer of each requirement of 1 above, explain which of the two organizations has the stronger position and performance. Comment and advise the management based on calculated ratios and your own analysis. 3. If you have been selected to audit both institutions, which audit report and opinion you will submit for each institution. Justify your report