FASB Sees Dissent on Nonprofit Accounting Changes
The Financial Accounting Standards Board is beginning to hear from not-for-profit organizations and their accountants about the far-reaching changes it has proposed in reporting by nonprofits, and finding there are some disagreements, even among FASB’s own leaders.
In April, FASB issued a proposed accounting standards update outlining the proposed changes (see FASB Proposes Major Changes in Nonprofit Accounting and Big Changes on the Way for Nonprofit Accounting).
The proposals include changes in the current net asset classification requirements and information presented in financial statements and notes to financial statements about a not-for-profit organization’s liquidity, financial performance, and cash flows. To better reflect financial performance in the statement of activities, there would be two measures of operating performance—available amounts that have been generated by or directed at carrying out the mission of a not-for-profit in the current period, both before and after any governing board actions affecting that availability.
“From what I’ve been hearing, everybody believes that if improvements can be made to help the users better understand the not-for-profit’s financial statements, that would be a good thing,” said Lee Klumpp, National Assurance Technical Director in BDO’s Nonprofit & Education practice, who has been closely involved with the project as a FASB fellow, at his firm as well as in the Greater Washington Society of CPAs’ Accounting Policy Committee. Read more on Accounting Today.