The first proposed changes in 20 years are on the horizon for the presentation of not-for-profits’ (NFP) financial statements. The Financial Accounting Standards Board (FASB) recently issued an exposure draft titled Not-for-Profit Entities and Health Care Entities: Presentation of Financial Statements of Not-for-Profit Entities, which would refresh the model for NFPs so that financial statements will better communicate financial condition and performance to donors, grantors, creditors, and other stakeholders.
The major suggested changes would improve the understandability, comparability, and usefulness of an NFP’s current net asset classification requirements and would provide greater clarity in assessing an NFP’s liquidity, financial performance, and cash flows. Liquidity assessment would be enhanced as the new standard would provide clarification on which assets are not available for current operating expenses due to internal or external restrictions on those assets. There also would be a disclosure from management about how the entity’s liquidity is managed.
PYA previously issued a summary of the proposed changes, which you may view here. You may view FASB’s summary of proposed changes here.
In connection with these proposed standards, FASB has published two sets of FAQs and FASB’s answers—the first in May 2015, and the second in June 2015.
If you have questions about the exposure draft or the FAQs, please contact the expert listed below at PYA (800) 270-9629.
