Discussion Upcoming pronouncements Upcoming pronouncements Summary - PDF document

10/18/2019 Nonprofit Accounting Update: Present & Future UFLC 2019 Dallas, Texas Bill Sims , CP A, Partner S almon S ims Thomas Ashley Voss , CP A, Partner Ratliff & Associates 1 New reporting standards New reporting standards Lessons learned, pros & cons Lessons learned, pros & cons Discussion Upcoming pronouncements Upcoming pronouncements Summary Revenue recognition Revenue recognition Leases Leases Questions Questions 2 1

10/18/2019 So you’ve implemented… How did it go… ? Reflections on  Has your presentation AS U 2016-14 improved? Present at ion of  Are you providing more Financial useful information: financial S t at ement s of performance, cashflows, liquidity? Not -for-Profit Ent it ies  Transparency of spending  S implified terminology  Has the new standard helped you tell your story? 3 Net Investment returns & Endowment deficiencies Cash flow statement Options & Key Areas F AS B Preferences Impacted CIP: release donor-restricted net CIP: release donor-restricted net assets when placed in service assets when placed in service 4 2

10/18/2019 Net Assets: with vs without Key Areas Expenses: Functional vs Natural & Allocations Impacted Liquidity and Availability of Resources S almon S ims Thomas, PLLC 5 Net Assets Perm. Old Temp. Unrestricted Restricted Restricted GAAP Without Donor With Donor Revised GAAP Restrictions* Restrictions* + Amount, purpose, Nature and amount Disclosures and type of board of donor restrictions designations** * NFPs may still choose to disaggregate further: UNA vs DNA and TRNA vs PRNA ** New disclosure requirement (no longer optional) 6 3

10/18/2019  ++ 990 Filers & health/ welfare orgs have been required to do for some time  ++ Helps donors see where monies are being spent S tatement of  ++ Allocation between program & supporting/ admin services Functional  ++ Either on face of F/ S or in notes – by function AND natural Expenses classification (i.e., matrix)  ++ Questions: Does my org need t o do t his… ? What are my real opt ions… ? 7 SoFE Decisions  Maj or program/ function/ nature vs “ Other”  What & how many categories are significant to your users… ?  Allocation of Pastor’s salary/ benefits  Match to 990 Part IX?  Description of allocation method  Time studies  S pace/ program use  IT challenges: S ystem vs manual creation 8 4

10/18/2019 Opting out of SOFE implementation  Interest of users  Financial  Qualified institutions opinion  Members  Donors  Future intentions 9 Qualitative:  How NPO manages its liquid available resources and liquidity risk Liquidity & ( Strategy ) Availability Quantitative: of Resources  Availability of financial assets @ b/ s date to meet general cash needs for expenditures within 1 year  ( Table ) 10 5

10/18/2019  Restrictions & designations reducing available cash?  Cash reserves… but Liquidity how much ?  Negative availability and  Access to additional Availability funds  Line of credit of Resources  Investments  S ubsequent contributions  Inherent limitations 11 Upcoming Pronouncements  Revenue from Contracts w/ Customers  (AS U 2014-09, aka AS C 606)  Effect on churches?  Contribution vs. Exchange Transactions  Conditions vs restrictions  (AS U 2018-08)  Do you receive conditional donations? Restrictions? 12 6

10/18/2019 Upcoming Pronouncements  Leases (AS U 2016-02) Get organized: Do you have all contracts identified? S ize of leases/ what are you leasing? Does this affect debt covenants?  S tatement of Cash Flows: Restricted Cash  (AS U 2016-18) Do you know all your cash equivalents? 13 Questions?  Bill Sims, CPA, Partner bsims@sstcpa.com  Ashley Voss, CPA, Partner avoss@ratliffcpas.com 14 7