On August 18, 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that improves existing standards for financial statement presentation by not-for-profit organizations to provide better information to donors, grantors, creditors, etc. This guidance is the first major set of changes to not-for profit financial statement presentation standards since 1993, when the FASB Statement No. 117, Financial Statements for Not-for-Profit Organizations was released, which established the current reporting guidance
The ASU focuses on improving the current net assets classification requirements and information presented in financial statements and notes that is useful in assessing a not-for-profit’s liquidity, financial performance, and cash flows.
The update attempts to address the following concerns 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
The amendments in this update are effective for annual financial statements issued for fiscal years beginning after December 15, 2017, which means that for Children’s Friend these changes will be reflected in our 2018 annual financial audit. For more information, go to www.fasb.org.
Children’s Friend will work closely with our outside accountants to ensure that we are in compliance with these new standards.