Project Update

Financial Statements of Not-for-Profit Entities

Last updated on October 30, 2015. 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 this project is to reexamine existing standards for financial statement presentation by not-for-profit entities (NFP), focusing on improving:
  1. Net asset classification requirements
  2. Information provided in financial statements and notes about liquidity, financial performance, and cash flows. 
An October 2014 short video outlines the reasons why this project was added to the FASB’s technical agenda and provides an update on significant decisions reached during the project, including how those decisions address the project objectives.  An April 2015 short video discusses the proposed Accounting Standards Update, and its intended improvements to NFP financial statements and notes to the financial statements.

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 (press release). The comment period ended as of August 20, 2015.

FASB in Focus provides a concise summary of the proposed Accounting Standards Update.

Frequently Asked Questions (FAQs) on the Exposure Draft of the proposed Accounting Standards Update are being provided by the FASB staff for informational purposes. They address common questions that have been raised about the proposed changes and relate to matters that the Board is likely to be considering or reconsidering during its redeliberations of the proposals. To date the staff has issued the following FAQs: On May 12, 2015, the FASB hosted an educational webinar, IN FOCUS: FASB’s Proposed Changes to the Not-for-Profit Financial Statement Model, which provided an in-depth look at the proposed Update, specific amendments in the proposal, and what feedback the Board is seeking from stakeholders.

*Decisions Reached at Last Meeting (October 28, 2015)

The Board discussed the staff’s summary of feedback received on the April 2015 proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities. The Board also discussed the recommended plan for redeliberations.

Plan for Redeliberations

The Board decided to divide its redeliberations of the proposed Update into two workstreams. The first workstream would reconsider the following issues that are not dependent on other projects and are improvements the Board might finalize in the near term:
  1. Net asset classification scheme, including:
    1. Disclosure of board-designated funds
    2. Underwater endowments
    3. Placed-in-service option for expirations of capital restrictions
  2. Expenses, including:
    1. Expenses by nature and an analysis of expenses by function and nature
    2. Netting of external and direct internal investment expenses against investment return
    3. Disclosure of netted investment expenses
    4. Enhanced disclosures about cost allocations
  3. Operating measures: improving disclosures by those not-for-profit entities that choose to present such a measure
  4. Improving disclosures of information useful in assessing liquidity
  5. Statement of cash flows: methods of presenting operating cash flows.
The second workstream 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 the Board did not previously consider or are related to similar issues being addressed in other projects. Those proposals include:
  1. Operating measures: all other elements of the proposal, including:
    1. Whether to require intermediate measure(s)
    2. Whether and how to define such measure(s) and what items should or should not be included in the measure(s)
    3. Alternative disaggregation approaches suggested by stakeholders
  2. Statement of cash flows: realignment of certain line items.

Summary of Decisions Reached to Date (April 7, 2015)

Please see the linked PDF for a summary of decisions reached to date.

*Next Steps

The Board will begin redeliberations on certain issues in the first workstream at the Board meeting tentatively planned for December 11, 2015.

*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.

*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
April 7, 2015 Board Meeting—Comment Period Length
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
August 27, 2014 Board Meeting—Note Disclosures on Salaries and Benefits Expense, Cost-Allocation, and Tax-Exempt Status
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 28, 2014 Board Meeting—Presentation and Disclosure of Information about Liquidity
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
December 18, 2013 Board Meeting—The Statement of Functional Expenses
December 11, 2013 Education Session—The Statement of Functional Expenses
October 23, 2013 Board Meeting—The Statement of Cash Flows
October 2, 2013 Education Session—Liquidity and The Statement of Cash Flows
September 4, 2013 Board Meeting—Net Asset Classes: Classification and Disclosure Requirements
May 29, 2013 Education Session—Net Asset Classes: Background, Stakeholder Concerns, Plans for Revisiting the Net Asset Classes
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 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.


Contact Information

Richard Cole
Supervising Project Manager

Ronald J. Bossio
Senior Project Manager

Christopher Dickson
Postgraduate Technical Assistant

Ranee Wiley
Postgraduate Technical Assistant