December 31, 2018 will see significant changes to not-for profit-financial reporting. ASU 2016-14, Presentation of Financial Statements of not-for-profit entities will become effective. It is essential to understand the various aspects of the Accounting Standards Update (ASU). The previous reporting requirements for not-for-profit entities fell under the Financial Accounting Standards Board (FASB) 116 and 117, issued in 1993. In November 2011, the FASB announced two projects intended to improve the financial reporting of not-for-profit entities. This was the first change to reporting in over 20 years. In April 2015, an exposure draft was released with the comment period ending in August 2015. In October 2015, the board split the proposed update into two phases: • Phase 1 Included issues that weren’t dependent on other FASB projects and were improvements the FASB believed could be finalized in the near term. • The ASU that was issued in August 2016 includes the items that were included in Phase 1. • Phase 2 This phase includes matters that need further consideration as they may be impacted by decisions made in the Financial Performance Reporting project, which the FASB currently has on its agenda. FASB views ASU 2016-14 as Phase 1—the beginning of guidance to result from its multiyear review of the not-for-profit financial reporting model. There are critical enhancements to the reporting process which all not-for-profit entities should be aware of including: • Changes in net asset classification • Changes in investment returns • Changes in reporting of expenditures • Changes in reporting and disclosing liquidity and cash flow • Changes to the physical financial statements of the not-for-profit entity. This course will review the new requirements and provide examples on how they will impact the not-for-profit financials. This particular segment will focus on the changes relevant to net assets and how that impacts financial reporting. We will also explore options available for implementing requirements. Future segments will focus on the other aspects of ASU 2016-14. Field of Study: Accounting