FASB

FASB: Tentative Board Decision Made: Financial statements of not-for-profit entities (phase 1).

See below for the FASB communication summarizing the tentative decision made at the 02/03/16 board meeting.  

Quick summary: 

1. Decision passed to require netting of external and direct internal investment expenses against investment return. 

2.    Decision passed not to require that not-for-profit entities (NFPs) disclose internal salaries and benefits that are netted against investment return. 

3.  Decision passed require all NFPs to disclose expenses by natural classification..

4. The board did not decide on the requirement for all not-for-profit entities to report on function and nature in a matrix or other format.  The board is looking into whether certain "business-like" NFPs should be excluded from this requirement.  It seems the board will then  require the function and nature reporting in all NFPs and possibly carve out an exception for "business-like" entities. "Business-like" entities to be defined later if necessary. 

You can access meeting agenda here.

You can view the webcast below;


 

February 3, 2016 FASB Board Meeting

TENTATIVE BOARD DECISIONS

Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.


 
Financial statements of not-for-profit entities (phase 1). 

The Board continued its Phase 1 redeliberations on the proposed FASB Accounting Standards Update, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities, focusing on the following topics:

  1. Netting of external and direct internal investment expenses against investment return
  2. Disclosure of netted investment expenses
  3. Expenses by nature and analysis of expenses by function and nature
  4. Enhanced disclosures about cost allocations and improved guidance on management and general activities.

Netting of External and Direct Internal Investment Expenses against Investment Return

The Board affirmed the proposal to require the netting of external and direct internal investment expenses against investment return. The Board also directed the staff to provide implementation guidance to illustrate what activities constitute direct internal investing activities.

Disclosure of Netted Investment Expenses

The Board decided not to require that not-for-profit entities (NFPs) disclose internal salaries and benefits that are netted against investment return. The Board affirmed its decision that NFPs are no longer required to disclose any other investment expenses that are netted against investment return.

Expenses by Nature and Analysis of Expenses by Function and Nature

The Board affirmed the proposal to require all NFPs to disclose expenses by natural classification. The Board also directed the staff to explore whether to exclude certain business-like NFPs from the current requirement to report expenses by function before considering whether to require an analysis of expenses by function and nature.

Enhanced Disclosures about Cost Allocations and Improved Guidance on Management and General Activities

The Board affirmed the proposal to require NFPs to provide enhanced disclosures about the method(s) used to allocate costs among program and support functions. The Board also affirmed the proposal to refine the FASB Accounting Standards Codification® definition of management and general activities and to provide additional implementation guidance to better depict the types of costs that can be allocated among program and/or support functions and those that should not be allocated.