Is Your Not-for-Profit Ready for ASU 2016‐14?
The start of 2019 brings with it the implementation of a new accounting standard, ASU 2016-14: Presentation of Financial Statements of Not-for-Profit Entities, which is now effective for all not-for-profit organizations. By providing more detailed information regarding liquidity, financial performance and cash flows, this new standard attempts to improve the transparency of not-for-profits as well as make their financial statements more valuable for users.
It is important for organizations to understand the changes this new standard brings in order to remain in compliance. ASU 2016-14 was created with the intention of updating, not overhauling, the current not-for-profit financial statement model. The new standard includes a number of presentation and disclosure requirements including (1) net asset classes; (2) board designated net assets; (3) expense classifications; (4) liquidity and availability of resources; (5) underwater endowments; and (6) presentation of operating cash flows.
This is the first significant update to the not-for-profit financial statement reporting model in more than 20 years. As such, ASU 2016-14 will require a change in both process and mindset for preparers of not-for-profit financial statements. In order to assist with the implementation of this standard, EisnerAmper’s Not-for-Profit Group has created an “ASU 2016-14 Implementation Checklist.” This helpful resource will be used by our engagement teams to assist clients in evaluating and updating their current policies and financial statement presentation needed to successfully implement ASU-2016-14.
The checklist covers five key areas:
- Liquidity and availability of resources
- Board‐designated funds
- Endowment spending related to underwater endowments
- Functional expense allocation methodologies
- Expiration of restrictions on gifts of or for capital assets
For more information or to discuss your ASU 2016‐14 implementation checklist, please contact your EisnerAmper engagement team or click here.