Proposed Update on Cash Flow Presentation for Not-for-Profit Organizations

The Financial Accounting Standards Board (“FASB”) recently released Proposed Accounting Standards Update (“PASU”), Statement of Cash Flows (Topic 320): Not-for-Profit Entities: Classification of the Sale of Donated Securities in the Statement of Cash Flows.

Currently, some not-for-profit (“NFP”) organizations classify receipts from the sale of donated securities as investing cash flows.  Other NFP’s treat such cash receipts as either operating or financing cash flows, consistent with how the organization treats cash contributions and depending on whether or not the donated securities were intended to be used for long-term purposes.

To eliminate the diversity in current practice, the amendments in this PASU would require an NFP to classify cash receipts from the sale of donated securities as either operating or financing cash flows if the following two conditions are met: (A) the receipts were from the sale of donated securities that were directed for sale upon receiving the gift; and (B) the NFP avoided significant investment risks and rewards through the near immediate conversion of the securities to cash.

Consequently, the cash receipts from the sale of donated securities in which these two criteria were met would be classified as financing cash flows if the donor restricted the use of his or her contribution for long-term purposes, or operating cash flows if the contribution was not restricted for long-term purposes.  Absent these two conditions, the receipts from the sale of donated securities would be classified as investing cash inflows.

The FASB will accept comments on this PASU until July 16, 2012. The effective date will be determined after the FASB considers feedback received, but early adoption will be permitted.

For more information on this PASU or other financial reporting matters, please contact the expert listed below at PYA, (800) 270-9629.

Recommended Links:

Read the FASB Exposure Document regarding the above topic.

More information on PYA’s Healthcare Audit & Accounting Services.


Doug Arnold

Doug Arnold

Principal

Related Posts
PYA is pleased to announce the promotions of Michael Ramey, Matt Stuart, and Jeff Pate to the level of Equity Principal. PYA has announced the promotion of Senior Manager Michael...
Read More

PYA Announces Three New Equity Principals

PYA Principal Bob Paskowski is charting risk-contracting territory in an article published in the December issue of hfm Magazine, a publication of the Healthcare Financial Management Association (HFMA). Included in...
Read More

Charting Success: Key Risk-Contracting Provisions

PYA Healthcare Consulting Manager Kathryn Culver authored an article, “Changing Landscape for Health Lawyers,” which was recently published in Connections magazine, a monthly publication of the American Health Lawyers Association...
Read More

“Changing Landscape for Health Lawyers”

In today’s business environment, cloud computing arrangements play a key role in the day-to-day operations of companies large and small. The Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU)...
Read More

Clearing Up Cloud Computing Accounting

A recent article in DecisionHealth’s Part B News provides a glimpse into the future of charting patient encounters and the changes that will occur regarding Evaluation and Management (E/M) documentation....
Read More

PYA Thought Leader Quoted in Article Highlighting Potential Changes to E/M Documentation and Reporting

PYA made significant contributions to the recently released “BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements,” which serves as the definitive guide for healthcare organizations seeking to understand...
Read More

PYA Lends Expertise in Premier Industry Publication for Valuing Physician Compensation and Healthcare Service Arrangements

An on-demand webinar, presented by Mike Shamblin, CPA, and brought to you by PYA, helps lay the foundation for the new revenue recognition standard.  The webinar guides healthcare providers of...
Read More

PYA On-Demand Webinar Outlines the New Revenue Recognition Standard in Preparation for Implementation

Gaining a deeper understanding of the legalities associated with academic medical centers (AMCs) and other teaching hospitals will be the focus this winter at the American Health Lawyers Association (AHLA)...
Read More

PYA Supports AHLA Programming for AMCs and Teaching Hospitals

In the wake of this year’s devastating hurricane season, the President signed into law the “Disaster Tax Relief and Airport and Airway Extension Act of 2017” (the Act). This law...
Read More

Individual Tax Relief for Disaster Areas

Share This Insight

If you received value from this article, please share it with your network (e.g., Facebook, Twitter, LinkedIn). Icons below for your convenience.

Stay Current

* indicates required
Monthly eNewsletters
See more newsletter and alert options.

PYA Population Health Ascend

PYA Healthcare Blog

PYA Thought Leadership Services

The Healthcare Loop