This past week, the Financial Accounting Standards Board (FASB) issued a new accounting standard that will change presentation and disclosure requirements with the goal of providing the financial statement users (donors, grantors, creditors, etc.) useful information about the not-for-profits and their resources. The current reporting model used by not-for-profits is over 20 years old and FASB felt that some changes would simplify while improving the face of the financial statements and enhances the disclosures in the notes.
The major change with this new standard will be the reduction of the net asset classes from three to two. The new classes will be “Net Assets with Donor Restrictions”, which will include the previous permanently and temporarily restricted net assets, and “Net Assets without Donor Restrictions” (which was the previous unrestricted net assets).
The standard will also include the following changes (some of which may or may not be applicable to your not-for-profit):
Required qualitative information on how the not-for-profit manages its liquid available resources and liquidity risk. This would include relevant information about the nature and amount of limitations on the use of cash, contractual limits on the use of cash and the availability of the financial assets to meet cash needs for general expenditures within one year of the balance sheet date.
The Standard will be effective for fiscal years beginning after December 15, 2017 (if you have a June 30 fiscal year end, this will be effective for the fiscal year ending June 30, 2019). Eder, Casella & Co. will provide additional information as the implementation date gets closer. In the meantime, if you have any questions about this new standard and how it might impact your organization, please contact Cheryden Juergensen, CPA (Partner) at 815-344-1300 or firstname.lastname@example.org.