Are You Ready? NFP Financial Reporting Changes Are Here!

The FASB issued a long-awaited Accounting Standards Update (ASU) on the presentation of not-for-profit (NFP) financial statements. This ASU represents the conclusion of Phase I of FASBs NFP financial statement project. Some of the significant changes include:
  • Supplants the three existing classes of net assets (unrestricted, temporarily restricted, and permanently restricted) with two classes of net assets – net assets with donor restrictions and net assets without donor restrictions
  • New disclosures on liquidity, including:
    • Qualitative information on how liquid available resources are managed to meet cash needs for general expenditures due within one year of the balance sheet date
    • Quantitative information on the availability, and factors affecting the availability, of financial assets at the balance sheet date
  • Presentation and analysis of expenses by nature and function, which can be presented:
    • On the face of the statement of activities,
    • As a separate statement, or
    • In the notes to the financial statements
  • Investment returns must be presented net of all related external and direct internal expenses
This ASU is effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and early adoption is permitted.
For additional information on this ASU, including FASB’s In Focus and Understanding Costs and Benefits publications, click here. To monitor Phase 2 of FASB’s NFP financial statement project, click here. Please continue to check for practical implementation guidance and know that our professionals are always a resource to help you through these changes.


To read more on this topic from Paul Preziotti, please see his blog post on the American Institute of Certified Public Accountants’ AICPA Insights blog.

Paul Preziotti
Paul Preziotti | Principal