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Financial Statements of Not-for-Profit Entities (Phase 1) Continued FASB Redeliberations

Sikich

Mar 29 2016

2 min read

On March 23, 2016, the Financial Accounting Standards Board (FASB) met to continue redeliberations on the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities, focusing on the following topics:

Current requirement for not-for-profit entities (NFPs) to report expenses by their functional classification.
Proposed requirement for NFPs to report all expenses in one location, with an analysis of operating expenses by their function and nature.

Expenses by their Functional Classification

The Board decided to retain the current requirement for NFPs to report expenses by their functional classification either on the statement of activities or in the notes to the financial statements.

Expenses by their Functional and Natural Classification

The Board decided to require NFPs to report all expenses (other than netted investment expenses) by function and nature in one location. This information can be reported on the face of the statement of activities, in a separate statement or in the notes to the financial statements. In reporting its expenses, an NFP would be required to show the relationship between its functional and natural classification by disaggregating its functional categories by their natural classification. The Board directed the staff to explore, in Phase 2 of the project or in a future project, whether business-oriented health care NFPs should provide disaggregated information by segments instead.

As a leader in serving the NFP industry, Sikich is committed to keeping you informed and up-to-date on matters affecting you. If you have any questions or need more information on these or any other NFP issues, please contact one of our NFP executives.

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Sikich

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