On August 18, 2016, the Financial Accounting Standards Board (FASB) issued new rules affecting Not-For-Profit Entities. The new regulations are included in Accounting Standards Update (ASU) No. 2016-14, Not-For-Profit Entities (Topic 958): Presentation of Financial Statements of Not-For-Profit Entities. The new standard changes how not-for-profit entities classify their net assets. Net assets will be grouped into two categories, those with donor restrictions or those without donor restrictions. Currently, net assets are grouped into unrestricted, temporary restricted, and permanently restricted. The standard also requires new information about the entities’ liquidity and a listing of expenses by nature and function.
The new standard goes into effect for fiscal years beginning after December 15, 2017, with early adoption permitted. For more information please read a summary article published in the Journal of Accountancy.
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