Discussion Upcoming pronouncements Upcoming pronouncements Summary - - PDF document

10/18/2019 1

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

Discussion Summary

New reporting standards New reporting standards Lessons learned, pros & cons Lessons learned, pros & cons Upcoming pronouncements Upcoming pronouncements Revenue recognition Revenue recognition Leases Leases Questions Questions

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10/18/2019 2

Reflections on AS U 2016-14

Present at ion of Financial S t at ement s of Not -for-Profit Ent it ies So you’ve implemented… How did it go… ?

• Has your presentation

improved?

• Are you providing more

useful information: financial performance, cashflows, liquidity?

• Transparency of spending
• S

implified terminology

• Has the new standard

helped you tell your story?

Key Areas Impacted

Net Investment returns & Endowment deficiencies

Cash flow statement Options & F AS B Preferences CIP: release donor-restricted net assets when placed in service CIP: release donor-restricted net assets when placed in service

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10/18/2019 3

Key Areas Impacted

S almon S ims Thomas, PLLC

Net Assets: with vs without Expenses: Functional vs Natural & Allocations Liquidity and Availability of Resources

Net Assets

Old GAAP

Revised GAAP + Disclosures Unrestricted

Temp. Restricted Perm. Restricted

Without Donor Restrictions* With Donor Restrictions*

Amount, purpose, and type of board designations**

Nature and amount

• f donor restrictions

* NFPs may still choose to disaggregate further: UNA vs DNA and TRNA vs PRNA ** New disclosure requirement (no longer optional)

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10/18/2019 4

S tatement of Functional Expenses

 ++ 990 Filers & health/ welfare

• rgs have been required to do for

some time

 ++ Helps donors see where monies

are being spent

 ++ Allocation between program &

supporting/ admin services

 ++ Either on face of F/ S

• r in

notes – by function AND natural classification (i.e., matrix)

 ++ Questions:

Does my org need t o do t his… ? What are my real opt ions… ?

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

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Opting out of SOFE implementation

• Qualified
• pinion
• Interest of users
• Financial

institutions

• Members
• Donors
• Future intentions

Liquidity & Availability

• f Resources

Qualitative:

How NPO manages its

liquid available resources and liquidity risk (Strategy)

Quantitative:

Availability of financial

assets @ b/ s date to meet general cash needs for expenditures within 1 year

(Table)

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Liquidity and Availability

• f Resources
• Restrictions &

designations reducing available cash?

• Cash reserves…

but

how much ?

• Negative availability
• Access to additional

funds

• Line of credit
• Investments
• S

ubsequent contributions

• Inherent limitations

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?

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10/18/2019 7

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?

Questions?

• Bill Sims, CPA, Partner

bsims@sstcpa.com

• Ashley Voss, CPA, Partner

avoss@ratliffcpas.com

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