The amendments in Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, address several issues raised by stakeholders as follows:
- 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 not-for-profits 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.