The Financial Accounting Standards Board (FASB) continues to develop a set of accounting standards expected to dramatically alter how nonprofits prepare their financial statements. Since comments on the Exposure Draft of proposed Accounting Standards Update (ASU) No. 2015-230, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for Profit Entities, were received in August 2015, the FASB has continued to focus on net asset classification, presentation of expenses, information useful in assessing an organization’s liquidity and methods of presenting operating cash flows.
The FASB has recently made some notable amendments to the proposed standard. Among these, nonprofits wouldn’t need to disclose internal salaries and benefits that are netted against investment return. And they wouldn’t be required to present their operating cash flows using the direct method but could continue to use either the direct or indirect method.
The final ASU is expected in the third quarter of 2016. It will first apply to financial statements for calendar year 2018, with early adoption allowed. If you need further clarification please give us a call.