Reference: Accounting Today and Michael Cohn
New Standards for Nonprofit Accounting
The Financial Accounting Standards Board (FASB) voted to issue a proposed nonprofit accounting standards update that would include improvements to the current net asset classification scheme and the required information about an organization’s liquidity, financial performance and cash flows. The goal is to improve the financial statements for not-for-profit organizations and FASB is asking for public comments. The nonprofit accounting standards should be updated by mid-April.
FASB Project Update
Financial Statements of Not-for-Profit Entities
Project Objectives: The objective of this project is to reexamine existing standards for financial statement presentation by not-for-profit entities (NFP), focusing on improving:
- Net asset classification requirements
- Information provided in financial statements and notes about liquidity, financial performance, and cash flows
The Nonprofit Advisory Committee has been making recommendations to FASB since 2009 that it is time to re-evaluate the nonprofit accounting standards. Currently, there is no requirement for statutory financial statement filings for nonprofits, as there are for publicly traded companies. However, charities are required in many states to report their charitable registration with the state’s attorney general or which ever state office is responsible for charitable solicitation.
FASB’s proposed changes will make it easier for nonprofit board members to understand an organizations’s unrestricted net assets. Overall, a wide variety of nonprofits will be affected by the changes, especially nonprofits with real estate holdings, such as large hospitals, colleges, private foundations and religious organizations. For more information, click here.
Plumb provides outsourced nonprofit accounting services, including CFO, controllership, bookkeeping and project accounting work for audits and tax assistance. Nonprofits are burdened with some of the most complex accounting and reporting needs while having budgets that can’t always justify a robust internal staff. Plumb mitigates that problem for many nonprofits.
Plumb helps to enhance the success of San Diego’s nonprofit organizations with the Nonprofit Leadership Forum. Sign up for event notifications for free lunch and learn series held at The San Diego Foundation. Learn more