Accounting and Reporting for Not-for-Profit Organizations

Case Study 3

Statement of Financial Position and Statement of Cash Flows

Learning objectives

• Identify the required subtotals in the statement of financial position.
• Identify the cash flows unique to a not-for-profit’s cash flow statement.

Statement of financial position

FASB Accounting Standards Codification^® (ASC) requires that a statement of financial position report on a not-for-profit (NFP) entity as a whole and include the following subtotals:

• Total assets
• Total liabilities
• Total net assets
• Net assets with donor restrictions
• Net assets without donor restrictions

FASB requires that NFPs provide information about liquidity, but it provides a lot of flexibility in how the financial statements provide the information.

1. Sequencing assets according to their nearness of conversion to cash and sequencing liabilities according to the nearness of their maturity and resulting use of cash
2. Classifying assets and liabilities as current and noncurrent
3. Disclosing in notes to financial statements any additional relevant information about the liquidity or maturity of assets and liabilities, including restrictions on the use of particular assets

Assets are not required to be disaggregated based on of the presence or absence of donor-imposed restrictions. However, net assets should be disaggregated based on net asset classifications.

Statement of cash flows

FASB requires all NFPs to present a statement of cash flows. A statement of cash flows provides information about an organization’s ...