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The FASB announced at its October 28, 2015 Board meeting that it will be redeliberating the April 2015 proposed Accounting Standards Update, Not-for-Profit Entities (Topic 95*) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities (Proposed ASU).
The FASB received nearly 300 comment letters through the end of the comment period, which ended August 20, 2015. All sectors within the NFP industry were represented by the comment letters, with higher education and health care institutions comprising 13% and 10%, respectively, of the comment letters submitted.
In addition, the staff and certain Board members held 10 workshops to solicit feedback in five cities across the United States and participated in various outreach calls, including two major financial institutions that lend to NFP organizations. Additional, three public roundtables were held.
As we have written in previous articles within this series, the original purpose of the proposed ASU is to improve financial reporting by NFPs for the benefit of users (all users) of their financial statements. Based on the extensive outreach conducted by the FASB, Board members remain committed to this objective.
Substantially all respondents supported the Board’s overall objective, however, questioned some aspects of the proposal that were viewed as unnecessary. It is also clear that various sectors within the NFP industry have mixed opinions as to the usefulness of certain aspects of the proposed ASU, primarily related to the definition of an operating measure and how it is incorporated into the statement of activities, as well as certain proposed disclosures aligned with liquidity and endowment reporting.
Overall, feedback included a desire to differentiate between ‘business-oriented’ NFPs, such as certain health care entities, and ‘nonbusiness oriented’ NFPs.
Based upon the cumulative feedback received thus far, the Board reached a tentative decision to redeliberate the Proposed ASU into two workstreams. The first would reconsider the following issues and is expected to be completed by June 30, 2016.
The second stream would involve reconsideration of the other proposed changes that are likely to require more time, including:
The Board will begin deliberations on the first workstream at its December 11, 2015 meeting.
Visit ww.fasb.org for a copy of Proposed ASU, as well as a summary of the comment letters received.
Contact us if you have questions regarding Not-for-Profit Financial Reporting and visit our Not-for-Profit Industries page to learn more about the services that the Schneider Downs team can offer.
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