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Journal entry — FASB continues to redeliberate proposed guidance on the presentation of financial statements of not-for-profit entities

Published on: Mar 25, 2016

At its meeting this week, the FASB continued to redeliberate the proposed ASU1 it issued in Phase 1 of its project on the presentation of financial statements of not-for-profit entities (NFPs). The topics discussed and tentative decisions reached at the meeting are summarized below.

Report of Expenses by Function

The Board tentatively decided to continue requiring NFPs to report expenses by function either on the statement of activities or in the notes to the financial statements. The Board had considered excluding certain types of NFPs (e.g., business-oriented health care NFPs) from the current requirements but rejected that approach after discussing the results of outreach performed by its staff.

Report of Expenses by Function and Nature

The Board decided to affirm its proposal to require NFPs to report all expenses (other than netted investment expenses) by function and nature. NFPs would be permitted to report that information in the statement of activities, in a separate statement of expenses (currently called a statement of functional expenses), or in a schedule in the notes to the financial statements. The Board will consider requirements applicable to business-oriented health care NFPs during Phase 2 of the NFP project or in a future project.

Next Steps

The Board is expected to discuss transition and the effective date of the proposed guidance at its meeting on March 30, 2016.



1 FASB Proposed Accounting Standards Update, Presentation of Financial Statements of Not-for-Profit Entities.


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