Not-for-Profits

WHAT IS THE FASB NOT-FOR-PROFIT ENTITY TEAM, AND WHAT DO THEY DO?

The FASB has a long-standing commitment to the not-for-profit sector as part of the FASB’s standard-setting process for U.S. generally accepted accounting principles (GAAP). Over the years, the FASB has addressed the accounting and reporting needs of the sector, both for transactions that are unique to the sector (e.g., contributions received) and for transactions that it has in common with public and private business enterprises (e.g., employee postretirement benefit obligations). The FASB has staff members dedicated to advising the Board and other staff on issues pertinent to the not-for-profit sector and communicating with members of the sector. To reinforce and broaden such consultation and communication, in October 2009 the FASB approved the creation of a Not-for-Profit Advisory Committee (NAC). In addition, the FASB’s NAC is supported by a standing Not-for-Profit Resource Group.

WHY DOES THE FASB WANT TO HEAR FROM NOT-FOR-PROFIT STAKEHOLDERS?

In order to improve U.S. GAAP and to consider the costs and benefits of proposed improvements, the FASB and its staff need to hear directly from (a) stakeholders of not-for-profit entities (NFPs) about the type of financial information they need and (b) NFPs about the costs required to provide the information that their stakeholders seek. Among other things, we want to learn whether:
  • Financial statements are providing useful information that appropriately reflect the economics of the entity’s activities, resources and obligations
  • Financial statements include information that is unnecessary, redundant, or confusing
  • Proposed changes in accounting and reporting will result in communication from an organization that is more clear, complete, and comparable
  • The costs of implementing and complying with a new standard are justified by the increased benefits of the information improvements.
The FASB would like to hear from all stakeholders interested in the financial reports of NFPs, including the preparers, practitioners, and users of those financial reports. Among those stakeholders is a broad range of users that include:
  • Donors, including foundations and grantors
  • Lenders, significant vendors, lessors, and other creditors
  • Regulators, accrediting bodies, and other similar oversight bodies
  • Insurance providers
The not-for-profit entity team is available to explain any aspects of proposed, ongoing, or completed projects, including questions that may arise during the implementation of new standards. FASB’s not-for-profit project manager, Richard Cole, can be contacted at racole@fasb.org or 203-956-5266.


NOT-FOR-PROFIT ADVISORY COMMITTEE (NAC)

The Not-for-Profit Advisory Committee (NAC) was established in October 2009. The NAC is a standing committee that is expected to work closely with the FASB in an advisory capacity to ensure that perspectives from the not-for-profit (NFP) sector are effectively communicated to the FASB on a timely basis in connection with the development of financial accounting and reporting standards. The principal responsibilities of the Committee are to:

  • Provide focused input and feedback relating to (a) the need for and relative priority of proposed projects, (b) conceptual and practical implications of proposals under development in active projects, (c) practice issues, including implementation issues arising from new standards and potential areas for improvement pertinent to the NFP sector, and (d) longer-term issues important to the NFP sector.
  • Assist the FASB and its staff with communication and outreach activities to the NFP sector on recent standards and other existing guidance, current and proposed projects, and longer-term issues. NAC members are encouraged to communicate with the NFP sector, both to educate the sector about the roles of the FASB and the NAC and to encourage the sector to communicate with the FASB on financial reporting matters.
  • Advise on other matters for which the FASB may seek guidance. 

NOT-FOR-PROFIT STANDING RESOURCE GROUP

The FASB also has a standing Not-for-Profit Resource Group. Although the Board and staff may call on resource group members, its members primarily serve as a resource to the NAC. From time to time all members or particular types of members (for example, only preparers or only creditors, donors and grantors) are surveyed on matters of interest to the NAC. The time requirements generally are light but we do expect and have received a reasonably high rate of participation from these resource group members. If you are interested in serving on the standing NFP resource group, please contact Jeff Mechanick at jdmechanick@fasb.org or 203-956-5301.


More

RECENTLY ISSUED ACCOUNTING STANDARDS UPDATES AND RELEVANT PROJECTS

RECENTLY ISSUED ACCOUNTING STANDARDS UPDATES

Not-for-profit entities are impacted by various general standards throughout the guidance and by many of the projects currently on the FASB’s technical agenda. Additionally, there are projects on the Board’s technical agenda that specifically pertain to not-for-profit entities.

Presentation of Financial Statements of Not-for-Profit Entities (ASU 2016-14)

RELEVANT PROJECTS

Presentation of Financial Statements of Not-for-Profit Entities Phase 2

Revenue Recognition of Grants and Contracts by Not-for-Profit Entities