The most significant changes in non-profit (NFP) financial reporting in the last 20 years will be effective for reporting years beginning in 2018. In an effort to enable NFPs to better “tell their story”, Accounting Standards Update (ASU) 2016-14 modifies net asset classifications and improves consistency and transparency regarding financial performance, cash flows and liquidity. The following link provides an overview of the changes: NPOChanges - ASU 2016-14.pdf
Here are some recommendations to help you successfully implement the new standard:
- Start early.
- Identify the individuals who will lead implementation of the new standard.
- Attend training to understand the changes.
- Review net asset reporting to make sure classifications are correct.
- Discuss the changes with your audit or finance committee.
- Discuss the changes with your auditors related to audit timing and planning.
Executing changes of this magnitude can seem daunting. Our NFP team is available to answer questions, help with general training, and provide resources for best practices in implementing the new standard.
Daria Cruzen, CPA