Accounting Systems and Performance Evaluation for Nonprofit Organizations

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The objective of research was to study accounting and performance evaluation systems for nonprofit organizations(NPOs), and the following results were obtained :1.Many NPOs are worried about financial difficulty. If NPOs want to succeed in their fund raising program, they have to reform their management systems in order to establish relationship of mutual trust with their supporting customers. Therefore NPOs should develop strategic management systems to solve the problems that they face. While strategic management is a business idea, it is even more useful to mission-driven organizations that have no ready measure, such as profit, for evaluating their performance.2.Strategic management systems must include performance evaluation in terms of effectiveness and efficiency. Effectiveness is defined as the level of outcomes and efficiency is defined as the ratio of outputs to inputs. Then productivity is defined as the effective and efficient use of resources to achieve outcomes. Managers are concerned with both goal achievement(i.e., effectiveness) and the efficiency of efforts by emphasizing the definition of productivity.3.Accountability is an important concept for NPOs. Because performance measurement is useful for improving the quality of accountability, it is necessary to introduce accruals basis (i.e., a fundamental accounting principle, that revenues and costs should be dealt with in. the financial statements for the period which they are gained or incurred) into nonprofit sector.