Summing It Up – The Latest on Financial Reporting for Healthcare and Not-for-Profit Entities

ASU NFPsThe Financial Accounting Standards Board (FASB) continues to discuss proposed changes to the current healthcare and not-for-profit entities (NFPs) financial reporting model.  At its March 2, 2016, meeting, the FASB continued Phase 1 redeliberations on the proposed Accounting Standards Update (ASU), Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities, which we explored in a previous article.

The FASB issued the original exposure draft in April 2015 as part of its three-year project related to the not-for-profit financial reporting model.  After receiving public comment, the FASB decided at its October 2015 meeting to split the project into two phases.  Phase 1 would focus on issues that are not dependent on other projects and are considered to be finalized in the near-term; Phase 2 would focus on issues that will take more time since other proposals need to be considered.  The project’s objective was to reexamine existing standards for financial statement presentation by not-for-profit entities, focusing on improving a) net asset classification requirements and b) information provided in financial statements and notes about liquidity, financial performance, and cash flows.

The proposed ASU represents a conceptually different approach to how information is presented in financial statements. In that respect, it resembles the FASB’s research project on Financial Performance Reporting, which is focused on developing an operating performance metric for business entities.  The cornerstone of the proposed ASU is a new way of defining “operating activity.”  Items would be classified as operating or non-operating in the statement of activities (or similar statement) based on whether they arise from operating, investing, or financing activities.  The classification of certain items in the statement of cash flows would also be changed to be more consistent with the performance statement.  A defined subtotal for operating activity would be required for all not-for-profits.

The following is a recap of the FASB discussion March 2, 2016, related to Phase 1.

  • Not-for-profit entities (NFPs) would be required to report internal transfers appropriately disaggregated and described by type, either on the face of the financial statements or in the notes.
  • The staff was directed to include, in the final ASU, examples illustrating different ways entities might report such information.
  • The exposure draft would be modified to clarify the objectives of providing information useful in assessing an NFP’s liquidity and the type of information that financial statements are capable of providing for that purpose.
  • NFPs will be required to provide:
    • Qualitative information in the notes that communicates how the NFP manages its available liquid resources to meet cash needs for general expenditures within one year of the balance sheet date.
    • Quantitative information either on the face of the balance sheet or in the notes, and additional qualitative information in the notes as necessary, that communicates the availability of an NFP’s financial assets at the balance sheet date to meet cash needs for general expenditures within one year of the balance sheet date.

PYA will monitor additional decisions that come out of future FASB discussions and keep you apprised of those updates.

If you have questions about the latest financial reporting measures, or would like to request a speaker on this topic for your organization or event, contact one of our executives listed below, (800) 270-9629.

Doug Arnold

Doug Arnold


Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

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

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

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

Qualified conservation easements are becoming an increasingly popular way to save on your tax bill, but what exactly is a conservation easement, and what do you need to know to...
Read More

Conservation Easements: Save the Land, Save Your Money

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

Blockchain technology, one of the biggest technology developments in years, has the potential to transform the accounting and audit (A&A) industry. The potential benefits are numerous, but so are the...
Read More

Blockchain Technology—An Audit and Accounting Awakening

Guidance on accounting for share-based payment awards is clear...unless it isn't. The Financial Accounting Standards Board (FASB) offered advisement on this very topic in its Accounting Standards Codification (ASC), Compensation—Stock...
Read More

Share-Based Payment Awards: An Update on Modification Accounting

The growing popularity of companies like Airbnb and Vacation Rentals By Owner (VRBO), has many Americans considering renting out their homes, or even specific rooms in their homes,  in hopes...
Read More

Tax Rules to Know When Renting Your Home

Securing fidelity bond coverage as part of your retirement plan is a step in the right direction toward safeguarding your business from mishandled funds, mismanagement, and abuse. Further, it is...
Read More

The Importance of Fidelity Bond Coverage in Your Retirement Plan

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