Almost 20 years after its major overhaul of financial statement presentation by Not-For-Profit entities, the Financial Accounting Standards Board (FASB) is in the midst of a project to evaluate how well existing reporting is working and to make modifications. The FASB has reached some tentative decisions that will make significant changes to not-for-profit financial statements. An exposure draft is expected in the first half of 2014, which would including the following concepts:
- Replace the existing requirements to present totals for each of three classes of net assets on the face of a statement of financial position and for changes in each of those classes on the face of a statement of activities with similar requirements for each of two classes of net assets that convey net assets with donor-imposed restrictions and without donor-imposed restrictions.
- Modify the current requirement to provide information about the nature and amounts of different types of donor-imposed restrictions to remove the hardline distinction between temporary restrictions and permanent restrictions and focus instead on describing differences in the nature with a focus on both how and when the net assets can be used.
- Require disclosure of information about the amount and purposes of board designations of net assets without donor-imposed restrictions.
- Require the direct method of reporting cash flows provided/used by operating activities and remove the requirement to reconcile the change in net assets to net cash flows from operating activities.
- Report purchase of long lived assets for use in operations as operating outflows, not investing.
- Report cash outflows of interest expense and cash inflows of interest and dividends in the investing category.