Identify Departures from GAAP. The statement of activities for the ECE Childrens Learning Center for fiscal year 2017, prepared by a newly hired budget employee with no NFP experience, is presented on the following page.

ECE CHILDRENS LEARNING CENTER

Statement of ActivitiesFor the Period Ended June 30, 2017

Unrestricted Temporarily Restricted Permanently Restricted Total

Revenues:

Admission fees $732,000 $ 732,000

Special events revenue125,000 _ _ 125,000

Program fees 554,450 _ 150,000 704,450

Contributions 792,320 539,770 300,000 1,632,090

Grants 50,000 _ _ 50,000

Investment income 955 112 213,096 214,163

Total revenues 2,254,725 539,882 663,096 3,457,703

Expenses:

Center for creativity 947,173 582,834 _ 1,530,007

Outdoor experiences 522,297 _ 311,854 834,151

Management & fund- raising603,337 _ _ 603,337

Depreciation 10,735 _ _ 10,735

Total expenses 2,083,542 582,834 311,854 2,978,230

Decrease in net assets 171,183 (42,952) 351,242 479,473

Beginning net assets 798,011 33,245 2,500,767 3,332,023

Ending net assets $ 969,194 $ (9,707) $2,852,009 $3,811,496

Required

a. Because you are taking a not-for-profit course, a friend who sits on the board of the ECE has asked you to review its statement of activities. Your friend has a concern about the statement since it doesnt look quite the same as it did last year. Given that the ECE opted to hire someone without NFP experience, your friend has concerns that the statement may not be properly presented. Make a list of modifications or corrections that you believe should be made to the statement to ensure it is presented in confor-mance with GAAP.

b. Your friend indicates that the center is facing an upcoming audit. What con-cern would you have for the ECE regarding its audit, based on the financial statement it has prepared?