The Financial Accounting Standards Board established the Not-for-Profit Advisory Committee (NAC) in 2009 to research and discuss the financial reporting model for not-for-profit organizations. The main focus of the NAC is to review and perform a study on the financial reporting model of these businesses; part of its role also entails outlining the financial health of each organization.
At their meeting in March 2013, the NAC members discussed the presentation of operating results in the statement of activities, with a primary focus on reporting results from operations and non-operating items. The members emphasized an operating measure should be on current period activities and the sources for those activities, which would include prior period resources that became available during the current period. All revenues restricted by donors (or by law) or designated for future periods by the board would be presented as non-operating income. There was also a discussion on breaking out non-operating income between restricted revenues and items that for-profit companies would consider to be other comprehensive income (i.e. unrealized investment gains or losses).
The NAC remains in the discussion phase and no guidelines for financial reporting have been proposed to date.
Stay posted for more updates from the NAC’s next meeting this September or click here to contact me with questions.
Not-for-Profit Advisory Committee website: http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156543050