The Financial Accounting Standards Board in August of 2016 issued ASU No. 2016-14 that was titled Not-for-Profit Entities: Presentation of Financial Statements of Not-for-Profit Entities. This new standard applies to all not-for-profits and is effective for years beginning after December 15, 2017. The update is aimed to help improve financial reporting by providing more information to stakeholders as well as trying to eliminate some inconsistencies in the areas of expenses and liquidity.
Within ASU No. 2016-14 there are specific financial statement implications in the areas listed below:
Classification of Net Assets
Newly required disclosures that pertain to liquidity
Reporting on Functional Expenses
Presentation of Statement of Cash Flows
Reporting on Investment Returns
As an example, one of the newly required disclosures is the amounts and purposes of governing board designations, appropriations, and similar actions that result in self-imposed limits on the use of resources without donor-imposed restrictions as of the end of the period. This is just one example of the many changes that come with the new standard. It is important realize all of the effects these changes will have on your Not-for-Profit financial statements and we at Baldwin CPAs, PLLC would love to help you understand. Don’t hesitate to contact us at 1-866-287-9604.
Posted by Matthew McKirahan