(Comparing Cash versus Accrual Reports) The Professional Persons Association of Middleton is a nonprofit organization that is subject to the provisions of Audits of Certain Nonprofit Organizations. That dues for members are $40 per year; the fiscal year ends on August 31. Prior to September 1, 2015, 410 members had paid their dues for the year ended August 31, 2016. Prior to September 1, 2016, 457 members had paid their dues for the year ended August 31, 2017; one of these died suddenly on August 30, 2016, and the governing board decided to return his check to his widow. During the fiscal year ended on August 31, 2016, 36 other members died; 15 members were dropped for nonpayment of dues; and 1 member was expelled - no dues refunds were made to the estates of the 36 decedents; a $20 refund was made to the person expelled. Offsetting these membership decreases, 123 new members joined in fiscal 2016; membership as of September 1, 2015, had been 2,980 persons. Members admitted during a year are charged dues for the full year.
The association has reported membership dues revenue on the cash basis in prior years. You bring to the attention of the governing board the requirement that financial statements should be on the accrual basis, unless cash basis statements are not materially different. Since you are so knowledgeable, the board asks you to compute membership dues revenue for fiscal 2016 on both the cash basis and the accrual basis and to report to them the amount on each basis and your conclusion as to whether the difference between the two is material.