Category: Restricted funds

Those new accounting standards!

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Last August, the Financial Accounting Standards Board issued a new standard on not-for-profit financial reporting. It’s super-technical (which is why Cathy Keeps Books hasn’t gotten it together to comment until now). But bookkeepers should know the following:

  • The new standard will affect financial statements for fiscal years 2018 or later (specifically, it covers fiscal years that start after December 15, 2017).
  • It updates the reporting of restricted funds, investments, and cash flow.
  • Under this standard, the distinction between time-restricted and purpose-restricted funds is going away.
  • Board-restricted funds are also no longer a thing.
  • The standard requires “enhanced disclosures” about investments and liquidity.

According to the published update (click accept), “The currently required distinction between permanent restriction and temporary restrictions has become blurred by changes in state laws that diminished its relevance and rendered that distinction less useful.” The only classes in restricted equity will now be Net Assets With Donor Restrictions and Net Assets Without Donor Restrictions.

Here’s a screenshot from the FASB’s nonprofit portal:

fasb-org-screenshot

Other resources: AICPA coverage here, here and here. And AAF CPAs has some blog posts and a webinar.

Donor acknowledgement letters

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Useful bits and bobs come to you through CPA firm e-mails sometimes. Here’s an article from Clifton Larson Allen called “Donor Acknowledgement Letters: A Guide For Charitable Organizations.” Sounds good! In tiny nonprofits such as CKB assists, a bookkeeper might very well find herself asked about these letters—or asked to write one. According to CLA, a donor acknowledgement letter must include:

  • Organization’s full legal name
  • Date of donation
  • Amount of cash/check donation
  • In the case of a noncash donation, the charity should also provide a description (but not value) of the donated item(s)

A donation acknowledgement also needs one of the following:

  • Statement that no goods/services were provided in exchange for the donation and that the only benefit to donor was an intangible benefit, or
  • Description and estimated value of goods/services provided in exchange for the donation, and the net resulting deductible amount.

Read the full post.