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Posted by Michelle Spriggs on Sun, Nov 15, 2015 @ 11:00 AM


For the past three years, the FASB has been evaluating how to streamline the financial reporting model used by not-for-profits and health care entities. In 2015, the FASB published the long-awaited exposure draft that included the following proposed changes to the NFP Financial Reporting Model: reducing the number of net asset classes from three to two, modifying the statement of activities including a requirement to present an intermediate measure of operating performance, and changing the presentation of cash flows. The Exposure Draft also called for enhanced disclosures by not-for-profit organizations about their liquidity.

Comments on the proposed changes were due August 20, 2015. Given the significant feedback provided by practitioners, the FASB anticipates releasing an ASU covering only those topics that were largely accepted by the respondents and redeliberating the more controversial subtopics.

Among the items the FASB may propose changes to in the short term are:

Net asset classification- Changes being evaluated include disclosure of board-designated funds, underwater endowments and the placed-in-service option for expirations of capital restrictions.

Expenses- The FASB is considering a requirement to present expenses by nature, analyze expenses by function and nature, present investment return net of external and direct internal investment expenses with added disclosure requirements, and enhancing disclosures about cost allocations.

Disclosures- The FASB is evaluating how to improve disclosures related to liquidity as well as adding disclosure requirements for those NFP’s who elect presentation of an operating measure.

Statement of Cash Flows- The FASB is looking at different methods of presenting cash flows.

Feedback on the proposed accounting standards update led to questions and potential alternatives that were not addressed in the exposure draft. These include:

Operating Measures-Stakeholders raised questions about whether the FASB would require intermediate measures, how those measures would be defined and whether alternative disaggregation approaches could be used.

Statement of Cash Flows- The FASB is looking into whether certain line items in the statement of cash flows should be realigned.

For More Information

If you have specific comments, questions or concerns, please share them with Michelle Spriggs of the MHM’s Professional Standards Group. Michelle can be reached at mspriggs@cbiztofias.com or 774.206.8336. You may also contact us here.

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Michelle Spriggs is a Shareholder in the Not-For-Profit & Education Practice. She can be reached at 774.206.8336 or MSpriggs@cbiztofias.com.

 

 

 

 

 

Copyright © 2015 CBIZ Tofias & Mayer Hoffman McCann P.C. - Tofias New England Division. All rights reserved. CBIZ Tofias and Mayer Hoffman McCann P.C. - Tofias New England Division are separate and independent legal entities that work together to serve clients. CBIZ Tofias is a leading provider of tax and consulting services. Mayer Hoffman McCann P.C. - Tofias New England Division is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.

Tags: financial statements, Non-profits, FASB, Michelle Spriggs, NFP

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