Nonprofit Client Advisory – FASB Announces Tentative New Decisions on Nonprofit Financial Reporting

In our continuing efforts to monitor the activity of the Financial Accounting Standards Board (FASB) and the Not-For-Profit Advisory Committee (NAC) recommendations, we are issuing this advisory on recent tentative decisions reached by the FASB.

At the latest meeting on May 14, the FASB continued its deliberations on financial reporting standards for nonprofits, specifically around the presentation and disclosure of investment expenses and an intermediate measure of operations in light of the results of staff outreach with stakeholders of foundations and health-care entities. The FASB made the following tentative decisions:

  • All nonprofits would be required to disclose identifiable, direct external investment expenses and the amount of direct internal investment expenses incurred during the period
  • A nonprofit business-oriented health care entity would be required to present an intermediate measure of operations as previously defined by the FASB in this project.  Those entities would have the option of also presenting the performance indicator that is currently required by ASC 954-225-45-4.  As a result of this decision, all nonprofit entities, including health care organizations, would be required to present the same intermediate measure of operations.

As discussed above, these decisions are still tentative, and the FASB will be re-deliberating them alongside all other tentative decisions that were previously made throughout the duration of this project.  Exposure drafts for public comment are expected to be released later this year.  We encourage you to comment to the FASB and NAC with your views on the proposed standards updates to ensure they consider the views of all stakeholders when the exposure drafts are issued.