Joined: 28 Dec 2008 Location: United States
Online Status: Offline Posts: 219
Posted: 29 Jun 2009 at 13:35 | IP Logged
I understand the concept of "variance power" on its own but have trouble understanding how it is different when the intermediary and the recipient organization are financially interrelated, can anybody provide a quick little summary(when it is recorded as a liability/revenue etc.)?
Joined: 30 Jun 2009 Location: United States
Online Status: Offline Posts: 3
Posted: 30 Jun 2009 at 16:09 | IP Logged
In general if the orgination which originally receives funds for another organization and has authority over decisions such as to who, how much, or even if the money will be given to a second organization (otherwise known as "variance power"), then the first organiztion would record those funds as contributions (revenue). If the organization does not have authority over these decisions, then a liability is recorded. The organization is given this authority in the case where they are given "variance power" or if the organization is financially interrelated to the second organization. The difference between the two would be that variance powers are granted by the source of the funds to the first organization, whereas the nature of financial interrelation implies some control over these decisions. I hope that makes sense and helps.
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