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New FASB Standard on Not-for-Profit Financial Reporting: Start Planning Now


Following more than three years of discussion, public comment, and revision, the Financial Accounting Standards Board (FASB) has issued the first major set of changes to not-for-profit financial statement reporting in more than 20 years. The much-anticipated new guidance, Presentation of Financial Statements of Not-for-Profit Entities (ASU 2016-14), was issued last August. It is intended to enable not-for-profit organizations to tell their financial story more fully by changing the way all not-for-profits must classify net assets and prepare financial statements. While FASB maintains that the current standards were sound, the updates serve to provide better information to donors, grantors, creditors, and other users of financial statements.

Key Provisions of the New Guidance
 
For NFPs, adoption of ASU-2016-14 is effective for annual financial statements issued for fiscal years beginning after December 15, 2017 and for interim periods within fiscal years beginning after December 15, 2018.
 
CohnReznick's Steps to Implement FASB ASU 2014-16Steps to Implementation
 
A critical step for NFPs is to begin to educate their organizations’ key stakeholders – including board members, bankers, and donors – about the changes within ASU 2016-14. This is crucial in preparing them for the transition.
 
The timeline for the second phase of the project has yet to be determined. However, Phase 2 is slated to address a number of additional issues, some related to operating measures. These may include aligning measures of operations in the statement of activities with measures of operations in the statement of cash flows.
 
Contact
 
For more information on ASU 2016-14 and to proactively prepare for implementation, please contact: Kelly Frank, Partner and Not-for-Profit and Education Industry Practice leader, at 973-403-7999 or kelly.frank@cohnreznick.com, John Alfonso, Partner at 625-254-7415 or john.alfonso@cohnreznick.com, or Catherine Syslo, Director, at 862-245-5024 or catherine.syslo@cohnreznick.com.

 

 
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