The Financial Accounting Standards Board (FASB) Not-for-profit Advisory Committee (NAC) is continuing to develop recommendations intended to improve the nonprofit financial reporting model. The NAC is reconsidering whether the current net asset classification scheme – unrestricted, temporarily restricted and permanently restricted, based on donor intent, is the most relevant and meaningful classification scheme. They are also exploring reporting options, including a potential reformatting of the statement of activities, intended to provide better information about liquidity and operating activities. The current FASB project plan calls for the release of an exposure draft during the second half of the year. We will provide updates when information is available as the project may have a substantial impact on all non-profit financial statements.
As your fiscal year ends approach, the changes to consider are modest in comparison to what may be on the horizon and include some additional disclosures regarding fair value. Certain of the disclosures listed below, which are required by Accounting Standards Update 2011-4, are listed as applicable to public companies only. Keep in mind that if your organization has issued publicly traded tax exempt bonds, you are considered to be a public company.
Please contact a member of your engagement team if you would like to discuss the impact of any of these new disclosure requirements on your financial statements.