Nonprofit Financial Statement Project/ASU Update – FASB Announces Transition Method and Effective Dates

The Financial Accounting Standards Board (FASB) reached much anticipated decisions regarding the transition and effective date for its Nonprofit Financial Statements Project, as of their most recent Board Meeting (3/30/16).  The proposed Accounting Standards Update (ASU) would affect substantially all nonprofits as well as creditors, donors, grantors, and others that use their financial statements.  Details regarding the transition method and effective date are summarized below:
Transition Method
FASB decided that NFPs should apply the amendments on a retrospective basis for all years presented. However, if presenting comparative financial statements, NFPs would have the option to omit the following information for any years presented before the year of adoption:

  1. Analysis of expenses by both functional and natural classification,
  2. Disclosures around liquidity and availability of resources.

FASB decided that NFPs would not be required to apply the amendments to interim financial statements in the year of adoption, but information for those interim periods would be required to be restated if reported with financial statements for that fiscal year.
Effective Date
FASB decided that the amendments would be effective for financial statements for fiscal years beginning after December 15, 2017 and for interim financial statements for periods after that date. FASB also decided to permit early adoption subject to the transition method above.
AAFCPAs anticipates that the FASB will officially issue the ASU, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities in June of 2016.
What do we advise?
Since the ASU will apply to NFPs on a retrospective basis, we advise that you consider how the changes will impact your organization.  This will be important since it may be necessary to gather certain additional information for the year prior to the year of adoption to prepare comparative financial statements.  You also should consider whether there are any benefits for your organization to early adopt these new standards.
As a reminder, all of the reported decisions are tentative and may be changed at future Board meetings.  AAFCPAs will continue to follow the Board’s deliberations closely.  As always, we will keep you informed and provide further updates as they become available.
If you have any additional questions about how the new ASU will impact you, please contact your AAFCPA partner, or Matt Hutt,  at 774.512.4043,
Previous FASB Decisions: 

About the Author

Matthew Hutt CPA
Matt leads AAFCPAs’ Healthcare Division, providing assurance, tax and advisory solutions for Federally Qualified Health Centers (FQHCs), behavioral health providers, home care agencies and hospices, nursing homes, and senior care living centers. Matt advises healthcare providers on consolidation and coordination of care, including the integration of behavioral health into the primary care delivery system. He also provides consulting solutions for providers transitioning to new value-based reimbursement models, and data driven patient care, including: developing business process and controls for collecting and advantaging data to provide analysis on: provider activity, delivery of care, and analysis of efficiency & cost effectiveness. Matt is also highly-sought after for his knowledge on issues related to affordable housing developers with requirements related to the US Department of Housing and Urban Development, MassHousing, Low Income Housing Tax Credits, Historical Tax Credits and New Markets Tax Credits. 

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