You might have heard there are changes on the horizon for non-profit financial statement reporting. These changes include the requirement for all non-profits to report expenses by function. Non-profits will also need to change in the way net assets are classified. These changes will take affect for fiscal years beginning after December 15, 2017.
Tips from a not-for profit standard early adopter from the Journal of Accountancy
Implementing these changes may take some time so it is important to start early. Don’t wait until the end of your fiscal year or you may find that your financial statement preparation is delayed. Also, it’s important to note that you’re not in this alone – you should have a great resource in your CPA to help you navigate these changes. To help keep your focus on these important changes please consider taking the following steps –
- Adjustments to your chart of accounts – You may need to make adjustments to your chart of accounts. Some changes will be minor (setting up net asset accounts) and some more complicated (setting up your chart of accounts to track functional expenses). Your CPA will be delighted if you start to think about ways to map your new accounts. Having a discussions with them early can help ensure smooth implementation.
- Changes to your financial statement note disclosures – You may need to make changes to your note disclosures. Your CPA may have tools, as we do, to access standard note templates that can help you get started. Reach out to your CPA to have these conversations about the new required note disclosures to start drafting your notes early.
I know these changes may seem overwhelming, however, an early start and sound guidance can make the process less challenging. If you have any questions regarding the new standards, give us a call. We are here to help.