The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) that will have a major effect on the way Not-for-Profit Entities (NFPs) present their financial statements. This will be effective for your organization’s year end financial statement (either December 31, 2018 or June 30, 2019). Below are the highlights:
- The net asset classification options will be reduced to two options from the current three net asset classification options.
- When using the direct method of reporting on the Statement of Cash Flows the reconciliation of operating cash flows to the indirect method is no longer required. There are no changes for the indirect method.
- How investment returns and investment expenses are reported and disclosed.
- When and how NFPs release restrictions on fixed assets.
- Amounts and purposes of governing board designations, appropriations, and similar actions.
- Composition of net assets with donor restrictions at the end of the period and how the restrictions affect the use of resources.
- Qualitative information that communicates how an NFP manages its liquid resources available to meet cash needs for general expenditures within one year of the balance sheet date.
- Quantitative information and 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.
- Amounts of expenses by both their natural classification and their functional classification.
- Method(s) used to allocate costs among program and support functions.
- Underwater endowment funds
Do you know how your Financial Statements will look after the changes? We can help. Contact Helen Weeber, HW Nonprofit Advisors Group Director.