THE SOCIETY FOR FINANCIAL
E D U C AT I O N A N D P R O F E S S I O N A L
D E V E L O P M E N T, I N C .
8 TH A N N U A L F I N A N C I A L L I T E R A C Y
LEADERSHIP CONFERENCE
FA S B E X P O S U R E D R A F T
F I N A N C I A L S TAT E M E N T P R O J E C T
• Last overhaul 20 years ago
• FASB NFP Advisory Committee (NAC)
• Project objectives:
– Refresh the current model, to better tell the financial story
– Improve net asset classification, liquidity information, financial
performance and cash flow statement
October 27, 2015
2
REASONS FOR THE PROPOSED
U P D AT E
• Complexity of the current three classes of net
assets
• Inconsistency in reporting
• Inconsistencies in the type of information
provided about expenses of the period
• Opportunity to enhance the usefulness of the
statement of cash flows
October 27, 2015
3
MAIN PROVISIONS
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Net asset classes
Liquidity information
Activity statement
Cash flow statement
Project timeline
October 27, 2015
4
NET ASSETS
Source: Financial Accounting Standards Board
October 27, 2015
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S TAT E M E N T O F F I N A N C I A L
CONDITION
• Issues: Misinterpretation of temporary
restrictions, temporary v. permanent restrictions
• Changes:
– 2 classes of net assets from 3
– Without donor restriction and with donor restriction
– Added guidance to require disclosure of information to asses a NFP
liquidity position
October 27, 2015
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S TAT E M E N T O F A C T I V I T I E S
• Present on the statement of activities amounts
for the 2 classes of net assets
• Subtotals for Operational Activities
• Subtotal for Operational internal transfers in/out
• Subtotal for Non Operational activity
October 27, 2015
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O N E S TAT E M E N T A P P R O A C H
Source: Financial Accounting Standards Board
October 27, 2015
8
T W O S TAT E M E N T A P P R O A C H
Source: Financial Accounting Standards Board
October 27, 2015
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T W O S TAT E M E N T A P P R O A C H
(cont’d)
Source: Financial Accounting Standards Board
October 27, 2015
10
S TAT E M E N T O F C A S H F L O W S
• Direct method
• Operating – acquisition and sales of long term
assets
• Financing – payments of interest
• Investing – Interest and dividend income
October 27, 2015
11
C A S H F L O W S TAT E M E N T
• Require Direct Method for operating cash flows
– No longer require Indirect Method
– Should indirect method still be required for certain NFPs?
• Re-categorize certain items to better align
operating cash flows with the operating
measures
– Purchases of & proceeds on sales of long-lived assets (e.g., PP&E;
capitalized and non-capitalized collections)
– Cash gifts from interest & dividends
– Interest paid on long-term debt
October 27, 2015
12
ENHANCED DISCLOSURES
• Governing board designations
• Description of how the net assets with donor
restrictions affect the use of resources
• Management of liquidity information
• Expenses by nature and function
October 27, 2015
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