More Agenda Projects for Financial Reporting by Not-for-Profit Organizations
The chairperson of the Financial Accounting Standards Board (FASB), has announced the addition of two agenda projects—a standard-setting project and a research project—intended to improve financial reporting of not-for-profit organizations.
The objectives of these projects encompass suggestions received by the Board from its Not-for-Profit Advisory Committee at the Committee’s September 2011 meeting.
“The FASB shares the Committee’s belief that, while sound, the existing standards for financial statements of not-for-profit organizations can be updated and improved to provide better information to donors, creditors, and others,” said Leslie F. Seidman.
“As discussed at today’s Board meeting, FASB members agree it is time to revisit and refresh the not-for-profit financial reporting model, which is nearly two decades old.”
The standard-setting project will focus on the financial statements and related notes that are unique to not-for-profit organizations.
It will reexamine existing standards for financial statement presentation by not-for-profit organizations with a focus on improving the current net asset classification scheme and information provided in financial statements and notes about an organization’s liquidity, financial performance, and cash flows.
The research project will study other means of communication that not-for-profit organizations currently use in telling their financial story.
Specifically, the project will review best practices followed by not-for-profit organizations in this area and how such communications enhance the understanding of donors, creditors, and other stakeholders about the financial health and performance of the organization; and determine whether the Board, through its leadership or standard-setting efforts, can contribute to promoting such communications.
“On behalf of the FASB, I’d like to thank the members of the Not-for-Profit Advisory Committee for volunteering their time and expertise to developing their recommendations,” added Chairman Seidman.
“We greatly appreciate their efforts and their willingness to share specific ideas on how financial reporting about not-for-profits can be improved.”