Nonprofit
How Nonprofits Can Stay Aligned and Adapt as Conditions Change
Stronger alignment and shorter planning cycles help organizations stay focused on what matters most while adjusting more effectively to changing conditions.
The Financial Accounting Standards Board (FASB) continued its Phase 1 deliberations at its February 3, 2016 Board Meeting on the proposed FASB Accounting Standards Update (ASU), Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities.
Significant Decisions Made at the Board’s February 2016 Meeting:
The proposed ASU would affect substantially all nonprofits as well as creditors, donors, grantors, and others that use their financial statements. AAFCPAs would like to make you aware of the significant FASB decisions made on February 3:
- To require the netting of external and direct internal investment expenses against investment return. Implementation guidance will be provided to illustrate what activities constitute direct internal investing activities.
- To no longer require nonprofits to disclose internal salaries and benefit that are netted against investment return.
- To require all nonprofits to disclose expenses by natural classification. However, certain business-like nonprofits may be excluded from this requirement.
- To provide enhanced disclosures about the method(s) used to allocate costs among program and support function. Additional implantation guidance will be provided regarding costs that can be, or should not be allocated among program and/or support functions.
All of the reported decisions are tentative and may be changed at future Board meetings. It is expected that phase one of the proposed update will be completed and the final ASU, including effective dates, will be issued by mid-2016. The deliberations for phase two of the proposed update are anticipated to begin after the completion of phase one. However as of yet, there is no timeline.
AAFCPAs will continue to follow the Board’s deliberations closely. As always, we will keep you informed and provide further updates as they become available.
If you have any additional questions about how the new ASU will impact you, please contact your AAFCPA partner, or Matt Hutt, Partner at 774.512.4043, mhutt@aafcpa.com.
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