On August 18, 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-14, Not-for-Profit Entities (NFPs).
The new guidance contains significant changes to the financial statement requirements for NFPs, highlights are as follows:
- Only two classes of net assets will be presented instead of the current three classes. The two classes are net assets with donor restrictions and net assets without donor restrictions
- Enhanced disclosure requirements relating to net assets, liquidity, endowment funds, and expense classification and allocation
- For those using the direct method of reporting cash flows a reconciliation of operating cash flows to the indirect method is no longer required
- Report investment return net of external and internal investment expense without disclosure of netted expenses
- Use of the placed-in-service approach for reporting the expiration of restrictions relating to assets used to acquire or construct long-lived assets
NFPs will be required to apply the guidance to fiscal years beginning after December 15, 2017 (i.e., 2018 for a calendar year entity, fiscal 2019 for a fiscal year entity). Early application is permitted.
GSG will host a seminar to discuss these topics in more detail. Click here for more information.Categories: Audit & Accounting