Search I95 Business Magazine
Criteria:

Category:

 


625x90195business-01jpg
banner-adkirka120315tracreatisjpg

Changes on the Horizon for Non-Profit Organizations

October 2015
Kelli Miller, Principal at Weyrich, Cronin & Sorra, Chartered, has over 22 years of public accounting experience. She joined the firm in January 2008 as a Senior Manager after serving several years at a national firm. Kelli holds a Bachelor of Science Degree in Accounting from Mount Union College. Her experience includes audit, accounting, and consulting for a variety of clients with an emphasis on non-profit organizations and employee benefit plans. Kelli is also a qualified team captain for peer reviews of other accounting firms. She is a member of the AICPA and the MACPA. She is actively involved in various community services for non-profit organizations, currently serves as a Board Member and Finance Committee Member for the Maryland Bible Society, and serves on the Finance Committee and Capital Campaign Committee at Oak Grove Baptist Church. She was recently appointed to the Harford County Audit Advisory Board.

Kelli Miller, Principal at Weyrich, Cronin & Sorra, Chartered, has over 22 years of public accounting experience. She joined the firm in January 2008 as a Senior Manager after serving several years at a national firm. Kelli holds a Bachelor of Science Degree in Accounting from Mount Union College. Her experience includes audit, accounting, and consulting for a variety of clients with an emphasis on non-profit organizations and employee benefit plans. Kelli is also a qualified team captain for peer reviews of other accounting firms. She is a member of the AICPA and the MACPA. She is actively involved in various community services for non-profit organizations, currently serves as a Board Member and Finance Committee Member for the Maryland Bible Society, and serves on the Finance Committee and Capital Campaign Committee at Oak Grove Baptist Church. She was recently appointed to the Harford County Audit Advisory Board.

For over 20 years, the rules employed in preparing non-profit financial statements have remained fairly consistent. In 2011, at the recommendation of the Financial Accounting Standards Board (FASB)’s Not-For-Profit Advisory Committee, the FASB undertook a project to review the standards related to non-profit accounting.

In April 2015, the FASB released a proposed Accounting Standards Update (ASU). The proposed standard is designed to improve comparability of financial statements across the non-profit sector and enhance reporting of financial performance and cash flows. The FASB expects the changes to impact substantially all non-profit organizations, including charities, foundations, private colleges and universities, non-profit health care providers, cultural institutions, religious organizations, trade organizations and others.

This proposal will bring about major changes in how non-profit organizations report operations and activities within their financial statements. The most significant proposed changes include the following:

• The Statement of Activities will be segregated by operating performance, those activities related to the organization’s mission versus activities that are driven by actions of the Board (internal transfers).

• Net asset class presentation will be reduced from three to two, which will include net assets subject to donor restrictions and those not subject to donor restrictions. Accordingly, the strict distinction between temporarily and permanently restricted net assets will be eliminated.
• The Statement of Cash Flows will be presented using the direct method rather than the indirect method that uses a reconciliation approach. Additionally, cash inflows and outflows will be classified in a manner that is more consistent with the presentation in the Statement of Activities.
• All organizations, regardless of exempt purpose, will include detailed information on the nature and functional purpose of expenses.
• The notes to the financial statements will include additional information regarding the organization’s liquidity.
• Underwater endowment amounts will be included as net assets with donor restrictions and will require enhanced disclosures.
• Additionally, investment income will generally not be included in the results of operations. It will still be reported, but in a differentmanner. And all investment return will be presented net of relatedinvestment expenses.

The FASB’s Public Comment Period closed on Aug. 20, 2015. At this time, the FASB is re-deliberating over the Public Comments. The FASB has not yet established an effective date for the new standards nor have they provided implementation details.

As a result of these substantial changes, many organizations will need to evaluate how their activities will be presented in their future financial statements; how that will differ from current reporting; and the implications on funders, creditors, and other users of the financial statements. As with most changes, I anticipate that implementation of the Standard will likely bring with it both challenges and opportunities. I95

smbgeneralanimated300x250gif

i95-300x600-3-16-16jpg


nw-banner-ad-rickgerety300x250-120415jpg



625x90195business-01jpg
web-ad-i95-busvisajpg


wordsmatterjpg
 
wordsmatterjpg
 
amazingwebjpg