Why every CPA needs to know about the FASB not-for-profit changes

Oct. 11, 2017  |  Faye Hayhurst, CPA

My son is a fan of public radio. No, not a news and information station, but one that plays alternative music. As is typical of such organizations, they have periodic fund drives and, in the spring, my son celebrated his 21st birthday by becoming a monthly supporter. This fall he lamented to me that he had received another request for a contribution from the group (an exasperated “I already donated!”). I explained to him that it makes sense for charitable organizations to start their solicitation efforts with people who have donated before, because previous donors are more likely to contribute than people who haven’t. He begrudgingly acknowledged this made sense.

Anyone who’s donated to a charitable organization has experienced that repeat request. We are bombarded with “asks” by phone, mail, email, social media, TV advertising and billboards. According to the National Center for Charitable Statistics, there are more than 1 million public charities operating in the United States. That’s a lot of charities! How do you decide to which ones to contribute?

Many people, like my son, contribute to organizations they feel an affinity for, and that is where their evaluation of the organization begins and ends. As we mature, however, we usually add other criteria to the list, with financial responsibility and accountability on the part of the organization ranking high. To evaluate that aspect, we rely on financial reports.

That’s where the FASB changes, codified in Accounting Standards Update No. 2016-14, come in. ASU 2016-14 represents the biggest change in not-for-profit (NFP) reporting in 20 years. For fiscal years beginning after Dec. 15, 2017, every NFP (both charitable and noncharitable) will need to adjust its financial reporting for these changes. The overarching goal of the requirements is to improve the usefulness of NFP financial statements to donors and other users. For example, one new requirement is the addition of a liquidity disclosure, which aims to help identify an entity whose viability is in question.

Any organization that does not implement these changes will no doubt look foolish at best and poorly managed and, therefore, unworthy of future contributions at worst. In other words, noncompliance could spell disaster for unprepared organizations.

Most CPAs don’t work for an NFP entity or advise clients in the industry. But nearly all may serve as a board member, be a friend of or donate to a NFP that is close to their heart. Using their influence to help ensure that commendable organizations with laudable goals present their financial story in a useful and compliant way is reason enough for every CPA to learn the new rules. And knowing the rules will also help CPAs capably evaluate charities for their own future giving decision.

Want to get caught up on what these changes are? Check out these great resources:

Topics: Accounting and auditing, Regulation

Faye Hayhurst, CPA

Faye Hayhurst is the MNCPA director of finance and administration. She is committed to using numbers to tell relevant stories, although she also employs words, charts and occasionally clothing to communicate a message. While some have questioned her about the pressures of being the CPA for the MNCPA, Faye considers presenting financial information to fellow CPAs a dream job. Outside of storytelling with numbers, Faye enjoys directing her church's handbell choir, visiting national parks and other scenic places, and checking out the chocolate products at Trader Joe's. Faye can be reached at 952-885-5540 or

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