The Financial Accounting Standards Board (“FASB”) recently issued ASU 2016-14 “Presentation of Financial Statements of Not-for-Profit Entities” in an effort to improve transparency and understanding. Changes effected therein include:
- The 3 formerly applied classes of unrestricted, temporarily restricted, and permanently restricted assets will be simplified into two classes based on whether they are donor-restricted.
- Additional disclosures are required with respect to liquidity, including the availability of financial assets to meet cash needs in the coming year
- Expenses must be presented in one location by natural and functional classification
- Cost allocation methods must be disclosed
- Expenses netted against investment return need not be separately disclosed
These changes are effective for fiscal years beginning after December 15, 2017 and interim periods beginning after December 15, 2018.