Project Update

Financial Statements of Not-for-Profit Entities—Phase 2

Last updated on October 3, 2016. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

*Project Objective(s)
*Due Process Documents
*Decisions Reached at Last Meeting
*Summary of Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates
*Background Information
*Contact Information

*Project Objective(s)

The objective of Phase 2 of this project is to reexamine existing standards for financial statement presentation by not-for-profit entities (NFP), focusing on:
  1. Whether to require a measure of operations.
  2. Whether and how to define a measure of operations.
  3. Realignment of certain items in the statement of cash flows to better align operating cash flows with an operating measure on the statement of activities.
  4. An alternative of segment reporting for NFP health care entities in lieu of the requirement to provide an analysis of expenses by both natural and functional classification (a requirement in Phase 1).

*Due Process Documents

On April 22, 2015, the Board issued an Exposure Draft of the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954), for public comment. Based on the feedback received, the Board decided to divide its redeliberations of the proposed Update into two workstreams, Phase 1 and Phase 2.

On August 18, 2016, the Board completed Phase 1 by issuing ASU No. 2016-14, Presentation of Financial Statements of Not-for-Profit Entities. Further information about the ASU—including a FASB in Focus overview—is available at the completed project page.

*Decisions Reached at Last Meeting

At its meeting on October 28, 2015, the Board decided to divide its redeliberations on the Exposure Draft into two workstreams, Phase 1 and Phase 2. The Board has not begun to redeliberate Phase 2 at this time. Due to the postponement of this project as a result of awaiting further developments in the Financial Performance Reporting research project for business entities and feedback received from the FASB’s Invitation to Comment, the Board has not met to further discuss the project at this time.

*Summary of Decisions Reached to Date

The Board has not yet begun redeliberating Phase 2 and therefore there is currently no Summary of Decisions Reached.

*Next Steps

The staff will coordinate with research activities of the Financial Performance Reporting research project for business entities and feedback received from the FASB’s Invitation to Comment, issued on August 4, 2016.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

March 23, 2016 Board Meeting—Functional Expenses and Analysis of Expenses by Function and Nature
October 28, 2015 Board Meeting—Summary of Feedback, Redeliberation Plan
October 6, 2015 Public Roundtable—Los Angeles, CA 
September 21, 2015 Public Roundtable (Morning)—Norwalk, CT
Public Roundtable (Afternoon)—Norwalk, CT
March 4, 2015 Board Meeting—Overall Benefits, Costs, and Complexities and Permission to Ballot
February 25, 2015 Board Meeting—Sweep Issues, Transition, Indication of Effective Date, Comment Period Length, and Update on Overall Benefits, Costs, and Complexities
October 8, 2014 Board Meeting—Consideration of Benefits, Costs, and Complexities, including Alternatives to Reduce Complexities related to Capital-like Transactions and Board Designations, Appropriations, and Transfers
July 23, 2014 Board Meeting—Capital-Like Transactions; Intersection of NFPFS Project with Financial Performance Reporting Research Project
June 18, 2014 Board Meeting—Clarification of the Board’s Tentative Decision: Presentation and Disclosure of Investment Expenses; Capital-Like Transactions; Note Disclosures of Not-for-Profit Entities
May 14, 2014 Board Meeting—Presentation and Disclosure of Investment Expenses, Foundation Outreach, and Health Care Outreach and Performance Indicator
March 12, 2014 Board Meeting—Presentation and Disclosure of Liquidity
February 26, 2014 Board Meeting—Presentation of Revenues, Expenses, and Other Changes in Net Assets; Presentation and Disclosure of Investment Expenses
October 23, 2013 Board Meeting—The Statement of Cash Flows
October 2, 2013 Education Session—Liquidity and The Statement of Cash Flows
May 29, 2013 Board Meeting—Operating Measure: Definition and Presentation
May 15, 2013 Education Session—Operating Measure: Definition (cont.)
March 28, 2013 Education Session—Operating Measure: Definition (cont.)
January 31, 2013 Education Session—Operating Measure: Background, Objectives, Definition
June 6, 2012 Board MeetingProject Plan 
May 16, 2012 Education Session—Handout 
November 9, 2011 Board Meeting—Agenda Announcement

*Background Information

On November 9, 2011, the FASB chairman announced (press release) the addition of two agenda projects—this standards-setting project and a research project (Not-for-Profit Financial Reporting: Other Financial Communications)—intended to improve financial reporting of not-for-profit entities. The objectives of these projects encompass suggestions received by the Board from its Not-for-Profit Advisory Committee (NAC) at the Committee’s September 2011 meeting. The staff discussed the plans and approach for both projects with the NAC at its March 2012 and September 2012 meetings. Subsequent and ongoing discussions are held with members of the project resource group as well as members of NAC. The NAC page contains handouts and minutes from the NAC meetings.

On January 29, 2014, at the Agenda prioritization meeting, the Board voted to remove Not-for-Profit Financial Reporting: Other Financial Communications project (press release). This decision and potential alternatives were discussed with NAC at its March 2014 meeting.

On October 28, 2015, the Board decided to divide its redeliberations of the proposed Update into two phases. The first phase would reconsider issues that are not dependent on other projects and are improvements that the Board might finalize in the near term. The second phase would involve reconsideration of other proposed changes that are likely to require more time to resolve because they involve consideration of alternatives suggested by stakeholders that the Board did not previously consider or that are related to similar issues being addressed in other projects.

On August 18, 2016, the Board completed Phase 1 by issuing ASU No. 2016-14, Presentation of Financial Statements of Not-for-Profit Entities. Further information about the ASU is available at the completed project page.

*Contact Information

Richard Cole
Supervising Project Manager
racole@fasb.org

Rebecca Miklin
Postgraduate Technical Assistant
rmiklin@fasb.org

Lindsey Matherson
Postgraduate Technical Assistant
lmatherson@fasb.org