On March 30, 2016, the Financial Accounting Standards Board (FASB) had its final meeting before finalizing the first phase of the not-for-profit project. The board is working to improve financial statement disclosures stemming from the Proposed Accounting Standards Update (ASU) No. 2015-230, Not-for Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities. The board discussed transition guidance as well as the effective date for the final update for ASU No. 2015-230 proposal which was issued in April 2015. The board believes the proposed amendments will improve the disclosures of financial performance and cash flows while also providing more detail about expenses and reporting of assets. Phase two of the project will be discussed in 2017 and will look at additional changes related to reporting of financial performance and the preparation of cash flows statements.
Another topic discussed was the consolidated reporting guidance for not-for-profits entities. The main issues stem from ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis which was updated in February 2016. There have been numerous questions from non-for-profit organizations about clear guidance for when they must consolidate. The board has met with numerous not-for-profit organizations over the past few weeks to determine the best way to simplify the consolidation questions. In response the board met to determine whether the special purpose entity lessors guidance in Subtopic 958-810, Not-for-Profit Entities—Consolidation, is still relevant to not-for-profit organizations or could be superseded. The board met to vote on alternatives that would address each of those issues, transition guidance, whether the expected benefits of the tentative decisions on those issues justify the perceived costs, and permission to draft a proposed ASU. The alternatives include amending the consolidation guidance in Subtopic 958-810 to maintain current practice or amend the guidance to align the concept of controlling financial interest for a not-for-profit organization that is a general partner of a for-profit limited partnership with the concept of a controlling interest in the variable interest model.