FASB will look at some NPO issues

The accounting rule maker has added two issues to their agenda.  One is a research project and the other one, which could result in new accounting rules, addresses reporting issues.

Until more details are posted at the FASB web site, this paragraph will give you the general direction:

The standard-setting project will focus on the financial statements and related notes that are unique to not-for-profit organizations. It will reexamine existing standards for financial statement presentation by not-for-profit organizations with a focus on improving the current net asset classification scheme and information provided in financial statements and notes about an organization’s liquidity, financial performance, and cash flows.

These two agenda items are based on input from the Not-for-Profit Advisory Committee (NAC).  A summary of their recommendations can be found here.

Two of the comments mentioned from the NAC’s report are:

  • Revisiting current net asset classifications, and how they may be relabeled or redefined, in conjunction with improving how liquidity is portrayed in a not-for-profit’s statement of financial position and related notes
  • Creating a framework for not-for-profit directors and managers to provide commentary and analysis about the organization’s financial health and operations, somewhat similar to the “Management Discussion and Analysis” provided by publicly traded companies in their annual reports, to help them bring context to their financial story.

It will be a long time before there are any new rules. But at least we know FASB is again looking at issues affecting the NPO community.

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