guidestarblog_header.png

Need-to-Know for 2017: Nonprofit Liquidity Information


It is hard to believe we've closed the door on 2016.
With the commotion of holidays and end-of-year requirements, some—particularly smaller nonprofits—may have forgotten about the latest Accounting Standards Update (ASU) 2016-14, Presentation of Financial Statements of Not-for-Profit Entities (Topic 958), issued August 18, 2016, by the Financial Accounting Standards Board (FASB). Several changes to nonprofit financial reporting include:

  1. Improvements to the presentation and disclosures for net assets classes from the previous three classes of net assets (unrestricted, temporarily restricted, and permanently restricted) to two classes (without donor restrictions and with donor restrictions).
  2. Allowing free choice between the direct method and indirect method in presenting cash flows.
  3. Providing better information about functional expenses and disclosures about how expenses are allocated to management and general.
  4. Augmenting disclosures on underwater endowment funds.
  5. Unifying the reporting of investment returns.
  6. Enhancements to information provided about the liquidity and availability of financial resources.