Exploring FASB’s Not-for-Profit Financial Reporting Standard: ASU 2016-14
Firms, not-for-profit entities (NFPs), and their boards of directors will soon see some changes to NFP financial statements as a result of recent FASB Accounting Standards Update (ASU) 2016-14. This ASU was presented to simplify the net asset classification requirements and improve the information presented in financial statements and notes about an NFP’s liquidity, financial performance and cash flows. The new guidance is effective for periods beginning after December 15, 2017. The AICPA brought together the expertise of the Private Companies Practice Section (PCPS), Center for Plain English Accounting (CPEA), and Not-For-Profit Section to assemble the following toolkit.
Learning and Training Resources
FASB’s New Standard Aims to improve Not-for-Profit Financial Reporting - This resource outlines the changes resulting from FASB ASU 2016-14. It also provides helpful tips for implementing the standard.
ASU 2016-14: The FASB’s New NFP Standard - The Center for Plain English Accounting has produced a report explaining the new NFP standard changes. In addition, examples are used to illustrate the effects of the changes.
Staff Training PowerPoint - Use this template to get your staff up-to-speed and discuss key considerations they should be aware of regarding the new NFP standard.
FASB ASU 2016-14 - Explore the full FASB standard here.
Available financial statement examples – The following are additional examples of changes to the financial statements and disclosures as a result of FASB ASU 2016-14:
- Financial Statement Example: The AICPA's Not-for-Profit Expert Panel has created a full set of illustrative financial statements that shows the implementation of ASU 2016-14. The statements are available to download in PDF or linked Word and Excel formats to help you understand how the statements interrelate.
- Supplemental Health Care Disclosure Examples: The following resources address the impact of ASU 2016-14 on health care entities by specific area:
CPEA Audit Risk Alert: Not-For-Profit Entities Industry Developments: Read the 2017 Audit Risk Alert for not-for-profit entities, which provides an overview of recent economic, industry, technical, regulatory, and professional developments that may impact audits and other engagements.
Not-for-Profit Financial Accounting & Reporting Resources: On this site, you will find resources on accounting and financial reporting for NFPs, including illustrative financial statements and various articles on accounting topics.
AICPA Comments on ASU 2016-14 Form 990 Impact: This comment letter from the AICPA Tax Executive Committee addresses the alignment issues between IRS Form 990 and the new NFP financial reporting standard. The letter also includes recommendations for sample language.
NFP Illustrative Liquidity Disclosure Examples Practice Aid (Available to NFP Section members only): Download these illustrative liquidity disclosures for non-authoritative examples of possible footnote disclosures that comply with the requirements of ASU 2016-14. These fictitious examples are intended to help organizations consider how they want to craft their liquidity disclosures to enhance transparency and best tell their stories.
Communications with Clients, Board Members and other Parties
Educating clients, board members, and other interested parties about changes that will affect their NFP financial statements is key to simplifying implementation. Use these resources to educate and communicate with key NFP stakeholders financial statement changes and other considerations. This can provide an opportunity to strengthen your relationships with interested parties and proactively address concerns.
Template Article - This article outlines the new NFP standards in a format you can share with your clients via a variety of outlets. It is designed to be used as a template that can be modified to fit your firm’s approach and used to lay the groundwork for future conversations.
Communication Letter/E-mail template – Use this letter template to make your clients, board members or other interested parties aware of the new NFP standard on an individual basis. This letter can be customized with your logo and contact information, or the body can be copied into an e-mail for quick and effective electronic communication.
Financial Statement Changes: 5 Steps for Nonprofit Boards: Share this blog post from AICPA Insights with your clients and board to give them key considerations for ensuring that boards understand the implications of the new financial reporting standard.
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PCPS partners with firms of all sizes, creating targeted and customizable practice management resources, networking opportunities and is a strong, collective voice within the CPA profession.
The NFP Section provides exclusive access to timely content, including information and resources on financial reporting, assurance, tax compliance and board governance for those who work with or for NFP entities.
The Center for Plain English Accounting is the AICPA’s national A&A resource center, available exclusively to members of the Private Companies Practice Section. The CPEA’s team of experts assists member firms in understanding and implementing accounting, auditing, review, compilation, and quality control standards by sharing technical advice and guidance in a straight-forward manner.