FASB’s Not-for-Profit Advisory Committee (NAC) has established three working groups to study ways for FASB or others to improve financial reporting for nonprofit entities and to develop recommendations and alternatives for consideration by the full committee.
FASB established the NAC in 2009 to serve as a standing resource for the board in obtaining input from the nonprofit sector on existing guidance, current and proposed technical agenda projects, and longer-term issues affecting those organizations.
The three working groups include:
- Reporting Financial Performance. This group will consider how to improve the reporting of financial performance via the statement of activities—including the need for and definition of an operating metric, a separate operating statement, and net asset classification—and how changes in net assets are presented (the degree of flexibility of presentation that should be afforded). The subgroup also will consider how to improve the cash flow statement, including its interrelationship with the statement of activities.
- “Telling the Story.” This group will consider potential improvements beyond the statement of activities and statement of cash flows—for example, an MD&A type of standard, segment reporting, a statement of functional expenses, and summarized financial statements.
- Liquidity/Financial Health. This group will consider potential improvements that could be made to better reflect liquidity or other key measures of financial health, on the balance sheet and/or the notes.
The working groups will develop proposals for discussion at the next NAC meeting, which is scheduled for Sept. 8–9 at FASB’s offices in Norwalk, Conn.
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