FASB moving forward on some aspects of Not for Profit Financial Statements, will re-deliberate others
Following review of public comments on their proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities, the FASB has decide that some items are ready to move forward, but some of the more controversial or confusing items need some further discussion.
Plan for Redeliberations
The Board decided to divide its redeliberations of the proposed Update into two workstreams. The first workstream would reconsider the following issues that are not dependent on other projects and are improvements the Board might finalize in the near term:
1. Net asset classification scheme, including:
a. Disclosure of board-designated funds
b. Underwater endowments
c. Placed-in-service option for expirations of capital restrictions
2. Expenses, including:
a. Expenses by nature and an analysis of expenses by function and nature
b. Netting of external and direct internal investment expenses against investment return
c. Disclosure of netted investment expenses
d. Enhanced disclosures about cost allocations
3. Operating measures: improving disclosures by those not-for-profit entities that choose to present such a measure
4. Improving disclosures of information useful in assessing liquidity
5. Statement of cash flows: methods of presenting operating cash flows.
The second workstream would involve reconsideration of other proposed changes that are likely to require more time to resolve because they involve consideration of alternatives suggested by stakeholders the Board did not previously consider or are related to similar issues being addressed in other projects. Those proposals include:
1. Operating measures: all other elements of the proposal, including:
a. Whether to require intermediate measure(s)
b. Whether and how to define such measure(s) and what items should or should not be included in the measure(s)
c. Alternative disaggregation approaches suggested by stakeholders
2. Statement of cash flows: realignment of certain line items.
Reprinted from the FASB Action Alert dated October 30, 2015