The amendments in Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, are the first major set of changes to not-for-profit (NFP) financial statement presentation standards since the issuance of Financial Accounting Standards Board Statement No. 117, Financial Statements of Not-for-Profit Organizations, in 1993, which established the current reporting guidance. The new guidance addresses the following issues raised by stakeholders:
- Complexity and understandability of net asset classifications
- Deficiencies in information about liquidity and availability of resources
- Lack of consistency in the type of information provided about expenses and investment return
- Misunderstandings about and opportunities to enhance the utility of the statement of cash flows
Affected NFPs include charities, foundations, colleges and universities, health care providers, religious organizations, trade associations and cultural institutions, among others. The amendments are effective for annual financial statements issued for fiscal years beginning after December 15, 2017. Early application of the amendments is permitted.