AICPA Outlines Concerns about Proposed Changes in Nonprofit Accounting
The American Institute of CPAs has sent a comment letter to the Financial Accounting Standards Board weighing in on proposed changes in accounting standards for not-for-profits and saying they could create divergence from the financial reporting model used by for-profit businesses.
FASB issued its proposed accounting standards update in April and has been receiving comment letters from a variety of sources, pro and con (see FASB Sees Dissent on Nonprofit Accounting Changes). Even the original exposure draft contained some dissenting views from FASB chairman Russell Golden and vice chairman James Kroeker voicing concern about establishing differences in practice between nonprofits and for-profits.
The AICPA’s Financial Reporting Executive Committee, or FinREC, said in its comment letter that it is supportive of the FASB’s intent to improve financial reporting and disclosure for not-for-profit entities, but expressed concern that some of the provisions “would lead to a further divergence of the NFP financial reporting model from that of for-profit businesses.”
The AICPA’s August 10 comment letter explained, “It is in the best interest of financial statement users for a single 'core' financial reporting model to apply to all of FASB’s constituents—public business entities, private companies, and NFPs—with incremental differences tailored as necessary for the unique circumstances and characteristics of NFPs and private companies. As a result, FinREC is concerned that certain changes in the proposed ASU—specifically those related to the proposed definition of an operating metric and changes in cash flow classifications—would result in uncoupling the not-for-profit financial reporting model from the model used by business entities.” Read more on Accounting Today.