FASB Accounting Standards Update for Nonprofits – ASU2016-14 – What is the state of your organization’s liquidity, financial performance, and cash flow?
These are things that are critical to an organization being able to continue serving its constituents and mission.
Savvy donors want to make sure that that their financial contribution is going to an organization that is financially sound and takes stewardship seriously.
ASU2016-14 has been issued by the FASB (Financial Accounting Standards Board) to improve nonprofit financial statements by making it easier to assess an organization’s liquidity, financial performance and cash flow.
The FASB made the changes to address four problems with the current reporting requirement and improve transparency. From FASB.org, the four key issues the changes address:
- Complexities about the use of currently required three classes of net assets that focus on the absence or presence of donor-imposed restrictions and whether those restrictions are temporary or permanent
- Deficiencies in the transparency and utility of information useful in assessing an entity’s liquidity caused by potential misunderstandings and confusion about the term ‘unrestricted net assets’ and how restrictions or limits imposed by donors, grantors, laws, contracts, and governing boards affect an entity’s liquidity, classes of net assets, and financial performance
- Inconsistencies in the type of information provided about expenses of the period – for example, some, but not all, NFPs provide information about the expenses by both nature and function
- Impediment of preparing the indirect method reconciliation if an NFP chooses to use the direct method of presenting operating cash flows.
Is your staff up-to-date on the deadline and changes necessary for compliance? Does your nonprofit software solution accommodate the reporting that will be needed very soon?
If your organization is struggling with either accounting staffing issues or nonprofit accounting and reporting, your problems most likely can be solved by outsourcing your accounting to Qbix Accounting Solutions.
We are happy to discuss not just approaching deadlines associated with ASU2016-14, but an accounting solution that will simplify and improve your nonprofit accounting with minimum disruption and maximum improvement. You’ll be happy. Your board will be happy. But most important you will be ensuring that your organization will be serving its constituents and community for many, many years to come.