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T H E S O C I E T Y F O R F I N A N C I A L E D U C A T I O N A N D P R O F E S S I O N A L
D E V E L O P M E N T, I N C .
8 T H A N N U A L F I N A N C I A L L I T E R A C Y L E A D E R S H I P C O N F E R E N C E
F A S B E X P O S U R E D R A F T
2
F I N A N C I A L S T A T E M E N T P R O J E C T
• Last overhaul 20 years ago• FASB NFP Advisory Committee (NAC)• Project objectives:
– Refresh the current model, to better tell the financial story– Improve net asset classification, liquidity information, financial
performance and cash flow statement
October 27, 2015
3
R E A S O N S F O R T H E P R O P O S E D U P D A T E
• Complexity of the current three classes of net assets
• Inconsistency in reporting• Inconsistencies in the type of information
provided about expenses of the period• Opportunity to enhance the usefulness of the
statement of cash flows
October 27, 2015
4
M A I N P R O V I S I O N S
• Net asset classes• Liquidity information• Activity statement• Cash flow statement• Project timeline
October 27, 2015
5
N E T A S S E T S
Source: Financial Accounting Standards Board
October 27, 2015
6
S T A T E M E N T O F F I N A N C I A L C O N D I T I O N
• Issues: Misinterpretation of temporary restrictions, temporary v. permanent restrictions
• Changes: – 2 classes of net assets from 3– Without donor restriction and with donor restriction– Added guidance to require disclosure of information to asses a NFP
liquidity position
October 27, 2015
7
S T A T E M E N T O F A C T I V I T I E S
• Present on the statement of activities amounts for the 2 classes of net assets
• Subtotals for Operational Activities• Subtotal for Operational internal transfers in/out• Subtotal for Non Operational activity
October 27, 2015
8
O N E S T A T E M E N T A P P R O A C H
Source: Financial Accounting Standards Board
October 27, 2015
9
T W O S T A T E M E N T A P P R O A C H
Source: Financial Accounting Standards Board
October 27, 2015
10
T W O S T A T E M E N T A P P R O A C H ( c o n t ’ d )
Source: Financial Accounting Standards Board
October 27, 2015
11
S T A T E M E N T O F C A S H F L O W S
• Direct method• Operating – acquisition and sales of long term
assets• Financing – payments of interest• Investing – Interest and dividend income
October 27, 2015
12
C A S H F L O W S T A T E M E N T
• Require Direct Method for operating cash flows– No longer require Indirect Method– Should indirect method still be required for certain NFPs?
• Re-categorize certain items to better align operating cash flows with the operating measures– Purchases of & proceeds on sales of long-lived assets (e.g., PP&E;
capitalized and non-capitalized collections)– Cash gifts from interest & dividends– Interest paid on long-term debt
October 27, 2015
13
E N H A N C E D D I S C L O S U R E S
• Governing board designations• Description of how the net assets with donor
restrictions affect the use of resources• Management of liquidity information• Expenses by nature and function
October 27, 2015