10/18/2019 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 1 New reporting standards New reporting standards Lessons learned, pros & cons Lessons learned, pros & cons Discussion Upcoming pronouncements Upcoming pronouncements Summary Revenue recognition Revenue recognition Leases Leases Questions Questions 2 1
10/18/2019 So you’ve implemented… How did it go… ? Reflections on Has your presentation AS U 2016-14 improved? Present at ion of Are you providing more Financial useful information: financial S t at ement s of performance, cashflows, liquidity? Not -for-Profit Ent it ies Transparency of spending S implified terminology Has the new standard helped you tell your story? 3 Net Investment returns & Endowment deficiencies Cash flow statement Options & Key Areas F AS B Preferences Impacted CIP: release donor-restricted net CIP: release donor-restricted net assets when placed in service assets when placed in service 4 2
10/18/2019 Net Assets: with vs without Key Areas Expenses: Functional vs Natural & Allocations Impacted Liquidity and Availability of Resources S almon S ims Thomas, PLLC 5 Net Assets Perm. Old Temp. Unrestricted Restricted Restricted GAAP Without Donor With Donor Revised GAAP Restrictions* Restrictions* + Amount, purpose, Nature and amount Disclosures and type of board of donor restrictions designations** * NFPs may still choose to disaggregate further: UNA vs DNA and TRNA vs PRNA ** New disclosure requirement (no longer optional) 6 3
10/18/2019 ++ 990 Filers & health/ welfare orgs have been required to do for some time ++ Helps donors see where monies are being spent S tatement of ++ Allocation between program & supporting/ admin services Functional ++ Either on face of F/ S or in notes – by function AND natural Expenses classification (i.e., matrix) ++ Questions: Does my org need t o do t his… ? What are my real opt ions… ? 7 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 8 4
10/18/2019 Opting out of SOFE implementation Interest of users Financial Qualified institutions opinion Members Donors Future intentions 9 Qualitative: How NPO manages its liquid available resources and liquidity risk Liquidity & ( Strategy ) Availability Quantitative: of Resources Availability of financial assets @ b/ s date to meet general cash needs for expenditures within 1 year ( Table ) 10 5
10/18/2019 Restrictions & designations reducing available cash? Cash reserves… but Liquidity how much ? Negative availability and Access to additional Availability funds Line of credit of Resources Investments S ubsequent contributions Inherent limitations 11 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? 12 6
10/18/2019 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? 13 Questions? Bill Sims, CPA, Partner bsims@sstcpa.com Ashley Voss, CPA, Partner avoss@ratliffcpas.com 14 7
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