For the first time in 25 years, the FASB issued a new pronouncement that changes the financial statement reporting model for not-for-profit entities, ASU 2016-14.These standards change the presentation of the financial statements to allow the entity to reveal a little more about itself by telling their story through the financial statements.
The new not-for-profit financial statement reporting changes include:
- Simplifying the classes of net asset restrictions from three to two by making permanently restricted, temporarily restricted and unrestricted net assets to net assets with restrictions or without restrictions.
- Requiring liquidity disclosure with both quantitative and qualitative information about how the entity’s cash needs will be met within one year and how it manages liquidity risk and available resources.
- And finally, requiring expense reporting by functional class and nature, meaning not just program, admin and fundraising but an added level of detail for things like salaries, supplies, depreciation, etc.
These changes will be in effect for fiscal years ending after December 15, 2018.
While that may seem like far away, it’s never too soon to make sure you’re ready to meet these new revealing not-for-profit financial statement reporting requirements. For questions or assistance, contact a member of Withum’s Not-for-Profit Services Group or fill out the form below and we’ll reach out to you.
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