Implementing New FASB Not-For-Profit Financial Statement Reporting Standards of ASU 2016-14

New standards issued in Aug. 2016 represent the most significant changes to not-for-profit (NFP) financial reporting in almost a quarter century. The new requirements, issued in ASU No. 2016-14, are designed to make it easier for financial statement users and stakeholders to understand NFP financials.

The major differences between the new standards and existing practice involve increasing disclosures NFP entities are required to make in reporting cash flows and liquidity risks. The new rules allow nonprofit entities to choose whether to disclose information pertaining to the nature of expenses in notes to the financial statements or on the face of the statement.

The new standards also require nonprofits to reduce the number of net asset classes from three to two. Financial officers at NFPs must carefully examine their asset structures, particularly assets with significant donor restrictions and endowments that are “underwater.” These new standards are part of FASB’s ongoing plan to dramatically improve the usefulness NFP financial reporting and transparency to the users of the financial statements.

Listen as our experienced panel provides thorough and practical guidance to the new NFP reporting standards for net assets, expenses and liquidity.

1. Contents of ASU 2016-14
2. Change in net asset classifications
3. Reporting underwater endowments or endowments with donor restrictions
4. Liquidity reporting requirements and options
   1. Cash flow presentation
   2. Functional expense presentation
5. Additional FASB changes to follow

The panel will discuss these and other important topics:

• What are the considerations in determining whether to disclose the function and nature of expenses on the face of the financial statement or in the notes?
• What factors will NFP advisers and executives have to consider while reducing the number of net asset classifications from three categories to two, while also complying with the liquidity disclosures?
• What influence will donor restrictions and underwater endowments have on net asset classification?
• Should the NFP convert from indirect to direct method of reporting when presenting net amount of operating cash flows given that the new guidance no longer requires reconciliation to the indirect method?

Learning Objectives

After completing this course, you will be able to:

• Discern the specific changes to NFP financial statement reporting required by ASU 2016-14
• Identify the changes in net asset classification categories required by the new GAAP reporting standard
• Recognize the challenges in determining how to report underwater endowments and endowments with donor restrictions

• Determine the factors influencing whether NFPs should report the nature and function of expenses and what needs to be reported.

• Distinguish between the two methods of reporting cash flow and determine the best method for the NPF

• Develop a strategy for providing the required liquidity disclosures

• Field of Study: Accounting
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ public firm or not-for-profit organization experience at mid-level within the organization, preparing complex financial statements or tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of not-for-profit asset reporting requirements and financial statement preparation, including determining asset classification; familiarity with donor restrictions on endowments and underwater endowment rules; familiarity with preparing financial statement notes.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.