Accounting Standards Update (ASU) 2016-14 for Not-for-Profit Entities

Published on: 10/10/2016 By: Gorfine, Schiller & Gardyn

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.