The financial function is the bloodstream of any organization regardless of size, type and ownership structure. Though the importance of financial excellence is usually associated with business organizations that exist to make profit for their owners, the significance of an effective financial system cannot be undermined for not-for-profit (NFP) organizations as these organizations need to ensure the expenditures are controlled and are in line with the overall objective of the NFP.

To assess the financial performance of any organization a set of financial statements is used. The set of financial statement primarily includes the following reports which are collectively referred to as elements of financial statements:

Profit and loss account
Balance sheet
Cash flows statement
Statement of changes in owner’s capital
Notes to the financial statement

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