New Financial Reporting Standards for Not-for-Profit Entities

New financial reporting standards are here for Not-for-Profit (NFP) Entities. The Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-14 to update the current financial statement model. The standard is effective for annual financial statements issued for fiscal years beginning after December 15, 2017, and for interim periods with fiscal years beginning after December 31, 2018.

Here is a quick look at what’s changing:

  • Net Asset Classificationsthe new standard reduces the number of net asset classifications from three to two. In addition, additional disclosures will be required to include the nature and timing of restrictions, as well as additional required disclosures for board-designated funds.
  • Disclosures About Liquidity – new disclosures are required to provide qualitative and quantitative information about liquidity.
  • Statement of Cash Flows – under the new standard, it is no longer required to add the indirect reconciliation when using the direct method to present the statement of cash flows.
  • Presentation of Investment Expenses – the new standards require investment expenses to be netted against investment returns on the face of the financial statements. A disclosure of the component of investment expense will no longer be required.
  • Classification of Expenses – FASB ASU No. 2016-14 now requires expenses to be presented by both the function and natural class. In addition, the new guidance requires qualitative disclosures about methods used to allocate costs between program and support functions.

This is the largest NFP financial reporting change in several years. MMKR is here to assist with your NFP Entities’ transition. Check out our NFP page on our website.

Questions? Contact Jeff Miller at