The Financial Accounting Standards Board (FASB) is expected to release a scaled-back set of changes in accounting standards for nonprofit organizations this summer. These changes are intended to improve not-for-profit financial statements in a way that would better serve financial statement users. These accounting changes are being broken up into two phases.


Phase 1

Not-for-profits will need to adjust the way net assets are reported. Instead of reporting net assets as unrestricted, temporarily restricted, and permanently restricted; assets will be reported in one of two categories. One category will be for donor restrictions and one without restrictions.

Rules concerning the management of liquidity and availability have been updated as well. The goal of the changes is to better tell the story about what financial resources the not-for-profit has that are spendable for upcoming obligations.

Disclosure rules around reporting expenses by function are also being expanded, along with improvements to reporting of operating indicators. The goal is to be transparent to the reader of the financial statements so that they can see how those board decisions have affected the statement of activities.

Since FASB looks to align the way nonprofits report financial statements with the for-profit model, Phase 2 will depend on the time frame for applying changes to for-profits.

Effective Date

The board decided that the amendments will be effective for financial statements for fiscal years beginning after Dec. 15, 2017, and for interim financial statements for periods after that date — in other words, calendar 2018 and fiscal 2019 year ends.

Abila MIP Fund Accounting helps nonprofit organizations manage, streamline, and simplify budgets. Additional benefits include maximizing grants, managing HR, and quickly generating reports. Furthermore, we offer a fully integrated tool to track and report employees’ time.

Call Bob Schilling at 877-889-0629, email, or fill out our contact form to learn more about how our tools can help you implement budget changes.