FASB’s Not-for-Profit Advisory Committee Update
April 7, 2011
The committee formed by FASB to provide input on existing guidance, technical agenda projects, and longer-term financial reporting matters is studying financial performance, communication, and financial health. The Not-for-Profit Advisory Committee (NAC) is comprised of 15 members with expertise and knowledge of financial accounting and reporting matters affecting the not-for-profit sector. The NAC has met twice since appointments were announced in 2010, and will typically meet at least three times per calendar year either in person or via conference call.
During its second meeting on February 24 and 25, 2011, the NAC formed three working groups that will study the following:
Reporting Financial Performance will consider how to improve the reporting of financial performance via the statement of activities. Financial performance will address the need for and definition of an operating metric, a separate operating statement, net asset classification, and how changes in net assets are presented (the degree of flexibility of presentation that should be afforded). The subgroup also will consider how to improve the cash flow statement, including its interrelationship with the statement of activities.
Telling the Story will consider potential communication improvements beyond the statement of activities and statement of cash flows. The subgroup will consider items such as a Management’s Discussion and Analysis (MD&A) type of standard, segment reporting, a statement of functional expenses, and summarized financial statements.
Liquidity / Financial Health will consider potential improvements that could be made to better reflect liquidity or other key measures of financial health, on the balance sheet and/or the notes.
Stephen Golding, vice president of finance and treasurer at the University of Pennsylvania, is higher education’s representative on the NAC and will participate in the Financial Performance subcommittee. NACUBO will be assisting the Financial Performance subgroup by asking independent institutions to complete a survey that addresses operating metrics, net asset classes, endowment and other restrictions, and functional expenses. Controllers from independent institutions who would like to assist should contact NACUBO.
All NAC working groups will develop proposals that will be reviewed and discussed during the September 8-9, 2011, NAC meeting at FASB headquarters in Norwalk, CT. February 2011 NAC meeting highlights are available on FASB’s website.
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