The FASB recently released Accounting Standard update (ASU 2016-14) to improve the way not-for-profit or nonprofit entities present their financial information. This is the first major change to the nonprofit financial statement model in over 20 years.
ASU 2016-14 impacts all not-for-profit entities in the scope of Topic 958, as well as health care entities subject to the nonprofit guidance in Topic 954. The ASU addresses the following areas, including both quantitative and qualitative.
Areas addressed by the updates:
• Net asset classes
• Investment return
• Liquidity and availability of resources
• Operating cash flows presentation
The amendments in this Update are effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and for interim periods within fiscal years beginning after December 15, 2018.
The updates require non-profits, including their accounting/financial teams to review their current operational measures and reporting procedures to align with:
• The main provisions of ASU 2016-14
• financial statement preparation, including bookkeeping
• Effective dates and best practices for transition and
• A forward looking to possible changes to expect from the FASB