Not-for-Profit Financial Statement Exposure Draft

Posted on Wednesday, June 03, 2015

On April 22, 2015 the Financial Accounting Standards Board (FASB) issued an Exposure Draft of the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958) for public comment.  The comment period ends August 20, 2015.  The effective date and whether the changes would be effective for all nonprofits has yet to be determined by the FASB.  Most of the current reporting guidance for nonprofits was established in 1993 when the FASB issued Statement No. 117, Financial Statements of Not-for-Profit Organizations

The proposed changes are focused on improving the following items of a nonprofit organization’s financial statements.

1.      Complexity and understandability of net asset classifications.

2.      Inconsistent reporting of intermediate measures of operations in the statement of activities.

3.      Lack of consistency in the type of information provided about expenses of a period.

4.      Misunderstandings about, and opportunities to enhance, the utility of the statement of cash flows.

The FASB is hoping that the changes might better communicate a nonprofit organization’s financial performance to the users of the financial statements.

Below is a summary of the proposed changes compared to the current requirements.

Net Asset Classifications

Current Requirements

Proposed Changes

Statement of Activities

Current Requirements

Proposed Changes

Cash Flows

Current Requirements

Proposed Changes


Proposed Changes

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

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