Not For Profit Financial Statement

1233 Words5 Pages
Not-For-Profit financial statement preparers might experience dramatic changes in practice as a result of new standards which proposed on April 22, 2015. Before that time, the FASB has endeavored to eliminate differences in reporting between Not-For-Profits and business enterprises. In this new model that uses a different approach to presenting financial information, a key target is to make a consistency to all NFPs. For examples, NFPs within the proposal’s range would be required to demonstrate standardized operating measures. In addition, for the statement of cash flows, it asked to use the direct method to show it. Other proposed changes are designed to make it simplified and clarify the reporting of classes of net assets in the…show more content…
They thought the former one resulting in a lack of comparability in the financial statement of not-for-profits. Finally, in response to these concerns, the FASB issued a proposed Accounting Standards Update(ASU), Presentation of Financial Statements of Not-for-Profit Entities on April 22, 2015. The main objective of this proposal is to improve the usefulness of NFP financial statements by providing more transparent information regarding a NFP entity’s liquidity, financial information quality, and cash flows to donors, creditors, and other users of the financial statements. At the same time, “operating activities” is newly defined in this proposal. We have to distinguish operating from non-operating activities requires determining whether it is ongoing major or central to NFP operations. The Newly Main Provisions Requires NFP To: • For Net Assets Classification, in our textbook, I can find the FASB requires that not-for-profits classify their net assets into three categories based on the restrictions of donors: unrestricted, temporarily restricted, and permanently restricted. Compared to the old one, the newly proposed FASB draft would required NFP organizations to present on the face of the statement of financial position the amount for each of two classes of net assets – net assets with donor restrictions and net assets without donor restrictions. • All NFPs would be asked to report expenses not only by their
Open Document