What does SOFA mean in ACCOUNTING

A Statement of Financial Activities (SOFA) is a financial report which records the inflows, outflows and movements of funds within an organization for a given period. This document typically shows the overall financial performance of an entity over the course of a year, quarter or other reporting period.

A SOFA includes activities encompassing more than just direct income and expenses; it captures information on long-term investments, capital contributions, unrealized gains and losses, and other indirect sources and uses of funds. In contrast, the other financial statements focus more narrowly on immediate sources of revenue such as sales, operations expenses, interest income, etc.

A typical Statement of Financial Activities includes data such as "Net Assets," "Revenues" & "Expenses", often broken down into more specific categories like contributions, program services, investment income or gains/losses on investments. This information can also be organized by donor designations or cash-basis accounting methods.

The primary purpose of the SOFA is to provide stakeholders with an overview into the sources and uses of funds that have entered or left the organization over a specific period. This allows people to better understand how resources are being utilized within their company or organization.

All stakeholders should review this document regularly in order to accurately assess the fiscal health of their legal entity. People who may want to come into contact with this document include CFOs, auditors, executive directors/CEOs and board members.

Depending on your entity’s fiscal calendar year end date, you will need to compile your Statement Of Financial Activities at least once per annum. It is advisable to begin this process earlier rather than later as it usually requires significant time to collect all relevant documents and reconcile account balances before compilation can occur.

Not necessarily - you can prepare one manually using Excel spreadsheets if desired; however many companies opt for specialized software solutions designed specifically for producing Statements Of Financial Activities as they tend to automate certain aspects such as entries processing & ledger reconciliation tasks.

Some common mistakes shared among entities creating these documents include double-counting numbers across different accounts or forgetting important line items when drafting up entries - it's important to double-check work if accuracy matters! Additionally be sure that all ending balances reconciled correctly with source documents before finalizing your draft statement.