We keep you updated with the latest news from Martin Hood and helpful information whenever there is a change to employment or tax laws.
September 20, 2018
A new standard has been released for not-for-profit entities on August 18, 2016 (ASU 2016-14, Not-for-Profit Entities (Topic 958). The changes are in reporting presentation and disclosures. These new requirements become effective reporting periods beginning after December 15, 2018; therefore, if you are a June 30 year-end, your next year financials should be presented along these guidelines.
The major change in presentation is regarding classifications of net assets. Under ASU 2016-14 there will only be two classes of net assets, “Net assets with donor restrictions” and “Net assets without donor restrictions.” As a result, the previously-presented temporarily-restricted net assets, also labeled Board Designated restrictions, will most likely now be presented as “Net assets with donor restrictions.”
The other major changes are in reference to disclosures of the financial statements. ASU 2016-14 requires a disclosure on the availability of the entity’s financial assets to meet cash needs for general expenses within one year of the balance sheet date, a description of methods used for functional expense allocation, and how the entity manages its liquid resources. Also, as amounts of Board Restricted net assets are not listed on the face of the financial statements, they must be described as a disclosure.
With these new changes, it will take some time to get everything set up and organized. Therefore, it is best to start planning how these changes will affect your entity as soon as possible. Give us a call with questions you may have.