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News

New Accounting Standards for Nonprofits

by SST Senior Audit Manager, Bridget Losa

The Financial Accounting Standards Board (FASB) issued a new accounting standard ASU 2016-14, Presentation of Financial Statements for NFP Entities.  This standard is effective for fiscal years beginning after December 15, 2017. The amendments are required to be applied on a retrospective basis for all years reported. Early implementation is permitted.  The first section of the ASU applies to net assets and endowments.  The most significant changes are as follows:

Net Assets

1.) Required to be reported in two categories, net assets with donor restrictions and net assets without donor restrictions, replacing the current unrestricted, temporarily restricted, and permanently restricted categories

2.) Permitted to be disaggregated further

3.) Continued requirement to disclose the nature and amount of donor restrictions such as time, purpose, and perpetuity

4.) New disclosure requirement to communicate the amount, purpose, and type of board designations

5.) Absent explicit restrictions, net assets with donor restrictions that are for the acquisition or construction of long-lived assets will be required to be released when the asset is placed in service, eliminating the alternative of recognizing the expiration of donor restrictions over time

SST is hosting a Lunch & Learn on October 26th at The Hope Center in Plano, TX (11:15 – 12:30) to discuss the new reporting requirements under ASU 2016-14. If you are interested in attending please RSVP here.