News Release 04/22/15
FASB PROPOSES IMPROVEMENTS TO
NOT-FOR-PROFIT FINANCIAL STATEMENTS
Norwalk, CT, April 22, 2015—The Financial Accounting
Standards Board (FASB) today issued a proposed Accounting Standards
Update (ASU) intended to improve the information provided in
not-for-profit financial statements and notes to financial statements.
Stakeholders are encouraged to review and comment on the proposed ASU, Presentation of Financial Statements of Not-for-Profit Entities, by August 20, 2015.
"The proposed ASU contains recommended enhancements to the fundamental
reporting model for not-for-profit organizations—a model that has
existed for more than 20 years," stated FASB member Lawrence W. Smith.
"We believe that these changes will refresh the model in ways that will
make not-for-profit financial statements even more useful to donors,
lenders, and other users."
The document sets forth the FASB´s proposed improvements to current net
asset classification requirements and information presented in financial
statements and notes to financial statements about a not-for-profit
organization´s liquidity, financial performance, and cash flows.
Specifically, they are intended to:
The FASB first undertook this project in 2011 based on input provided by its Not-for-Profit Advisory Committee (NAC)
and other stakeholders. The NAC members said they believed that,
while sound, existing standards for financial statements of
not-for-profit organizations could be updated and improved to provide
better information to donors, creditors, and others.
- Better reflect financial performance in the statement of
activities by showing—in two measures of operating performance—available
amounts that have been generated by or directed at carrying out the
mission of a not-for-profit in the current period, both before and after
any governing board actions affecting that availability
- Simplify the existing net asset classification scheme along with enhanced note disclosures
- Enhance information in the notes to help financial statement
users better assess a not-for-profit´s liquidity and how it is being
- Make information about expenses more comparable and useful by
requiring that all operating expenses be reported by both function and
nature and investment return be reported net of related expenses, and
- Make the statement of cash flows more understandable by (a)
presenting cash flows provided by operating activities using the direct
method of reporting, rather than the indirect (reconciliation) method,
and (b) classifying cash flows in ways that are more consistent with
classifications in the statement of activities.
The proposed ASU and a FASB in Focus overview are available at www.fasb.org.
FASB to Host CPE Webinar on Proposed Changes
On Tuesday, May 12, from 1:30 to 3:10 p.m. EDT, the FASB will host an educational webinar that provides an in-depth look at the proposed ASU. IN FOCUS: FASB´s Proposed Changes to the Not-for-Profit Financial Statement Model, will look at specific amendments in the proposal and what feedback the Board is seeking from stakeholders. Registration
now is open for the event, which is worth up to two Continuing
Professional Education (CPE) credits to those who participate in the
About the Financial Accounting Standards Board
Established in 1973, the FASB is the independent, private-sector,
not-for-profit organization based in Norwalk, Connecticut, that
establishes financial accounting and reporting standards for public and
private companies and not-for-profit organizations that follow Generally
Accepted Accounting Principles (GAAP). The FASB is recognized by the
Securities and Exchange Commission as the designated accounting standard
setter for public companies. FASB standards are recognized as
authoritative by many other organizations, including state Boards of
Accountancy and the American Institute of CPAs (AICPA). The FASB
develops and issues financial accounting standards through a transparent
and inclusive process intended to promote financial reporting that
provides useful information to investors and others who use financial
reports. The Financial Accounting Foundation (FAF) supports and oversees
the FASB. For more information, visit www.fasb.org.