for Not-For-Profit Organizations
UNDERSTANDING >> PREPARING >> IMPLEMENTING
Any big change requires an education process—to learn what it is that’s changing and what needs to be done to satisfy the required changes. With the Financial Accounting Standards Board (FASB) issuing a new accounting standards update specifically for nonprofits (ASU 2016-14) to improve the current net asset classification requirements and the information presented in financial statements and notes about a nonprofit entity’s liquidity, financial performance, and cash flows, this is considered a big change.
In fact, this is the first major set of changes to nonprofit financial statement presentation standards since 1993.
IMPLEMENTING FASB ASU 2016-14
Part 3 in our 3-Part White Paper Series on Understanding. Preparing. Implementing. FASB ASU 2016-14
Reporting Requirements for Not-For-Profit Organizations is an active project plan to help you and your organization
focus on task-oriented items detailed in all 3 phases; understanding, preparing and implementing.
Feel free to edit and alter this to make it work for your unique nonprofit environment. Not every task will apply to your
nonprofit, and there will probably be tasks you will need to add. Part 3 is meant to help guide you and your team as you
embark on satisfying the new FASB ASU 2016-14 reporting requirements.
©AccuFund, Inc. 2018 www.accufund.com 3
PROJECT PLAN CHECKLIST—UNDERSTANDING
Determine timing of changes as it affects your organization and develop
schedule of implementation (sample timing chart found in FASB Deadline
Blog Article)
methods
Provide information/training on FASB ASU 2016-14 to board and
management to make sure everyone has the information they need to
proceed
Determine if current accounting software has the capacity to adequately
account for new requirements
Check with your software vendor
Determine who will need to be involved in changes to accounting software
Internal staff
IT department
Executive team
2016-14 accounting standards
updates for not-for-profit
ASU 2016-14 accounting
standards update for
PROJECT PLAN CHECKLIST—PLANNING
Hold regular planning/review meetings in order to address the following:
Determine new policies for handling board restricted funds, as they
no longer show in unrestricted, and are now reported in “with donor
restriction”
If the organization has an endowment, determine policies on investment
expenses
List and review all restricted funds in order to reclassify under new
classifications
Change in description of net assets to the new descriptors
(Net Assets Without Donor Restrictions, Net Assets With Donor
Restrictions)
information on the liquidity of the organization
Determine new disclosures or changes to disclosures mandated
by new requirements
expenses and the cost of direct benefits to donors
Will your organization need to start including a Statement of Functional
Expenses in the audit
If yes, examine cost allocation procedures and evaluate if they are
adequate for calculation of the Statement of Functional Expenses
If not adequate, review allocation procedures and best practices for
similar organizations
Add a description of the allocation method as a disclosure in the notes
to the financial statements
Review Financial Statements Choices:
Determine which format of Statement of Activities to use, Format A
(better for multi-year presentations), or Format B (closer to current
three-column statements)
separate statement or a statement embedded in footnotes
Statement of Cash Flows, does your organization want to change to the
direct method from the indirect method
Indirect method can be produced by many nonprofit accounting
software providers, see if yours is capable
Statement of Financial Position, review new net asset categories
Determine if current accounting software has the capacity to adequately
account for new requirements
Check with your software provider
Determine who will need to be involved in changes to accounting software
Internal staff
IT department
Executive team
PROJECT PLAN CHECKLIST—IMPLEMENTING
After determining the changes that need to take place, begin implementing:
Changes to the Chart of Accounts
Balance Sheet Accounts for Statement of Financial Position
Make INACTIVE:
Income Statement Accounts:
ADD:
Financial Statement Changes
Statement of Activity
Change columns
Statement of Financial Position
Change net asset rows
Change net asset summaries
Statement of Functional Expense
Determine programs/functions that are attributed to each column
Create statement in accounting software
Statement of Cash Flows
Does your software already create an indirect statement of cash
flows
If yes, edit
If no, should you create a direct statement of cash flows
in your accounting system
Identify accounts that will have noncash impact,
such as Accounts Payable, Accounts Receivable,
Accrued Salaries, and others)
<< Download: Part 2 of
accounting and the unique reporting requirements needed by nonprofits and
government entities—it’s one reason nonprofits and government entities have put
their trust in AccuFund since 2001. Our solution is for nonprofits and
governments. It’s not sold to manufacturing, distribution, construction or field
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Our complete fund accounting financial management solution – available online
or onsite – consists of a strong core system and modules that allow you to expand
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streamline every aspect of their operations.
The AccuFund system will free your accounting team, department managers, and
project managers from the burden of maintaining spreadsheets. In addition to
hundreds of reports that can be generated and distributed directly from the
system, critical information can be displayed through dashboards so that every
manager has their key data metrics visible throughout the day.
AccuFund Offers Onsite and Online Deployment Options:
• Online. True browser-based solution. Subscription-based. Pay a monthly
subscription fee to access the solution through a browser.
• Onsite. The traditional method of housing your software. License a solution
that is installed on a server that resides physically within your organization.
Leading the way with FASB ASU 2016-14 reporting, AccuFund is ready to go
with the new required reporting formats for nonprofit organizations to help you
improve transparency and overall financial management.
Special thanks to Michelle Hatch with BlumShapiro, for her contributions to this
FASB ASU 2016-14 White Paper Series.
<< Download: Part 1 of