The NFP Reporting Playbook - Virtual-3 - Bream - Financial-Statement-Presentation-and-Disclosures

3 - Bream - Financial-Statement-Presentation-and-Disclosures

Pdf Summary

This training document summarizes key financial statement presentation and disclosure requirements for not-for-profit entities under ASC 958. It emphasizes that NFP accounting focuses on stewardship, transparency, restrictions, and liquidity rather than profit. Major themes include proper net asset classification, revenue recognition, and common GAAP presentation errors.<br /><br />A central message is the “no net numbers” rule: revenues and expenses should generally be presented gross unless GAAP specifically requires netting. Examples include scholarships, cost of goods sold, and special events. The guide explains the difference between institutionally funded scholarships, donor-funded scholarships, and special events with direct benefits to donors. It also notes that investment income is an exception and must be presented net of related expenses.<br /><br />The document highlights liquidity and availability disclosures required under ASC 958-210, including qualitative policies for managing cash needs and quantitative disclosure of financial assets available for general expenditure within one year. It explains that assets may be unavailable due to donor restrictions, board designations, legal or contractual limits, or illiquidity.<br /><br />Net asset classification is another major topic. Only donors can impose donor restrictions; board designations are not donor restrictions. The presentation of contributions, including purpose, time, and perpetual restrictions, must be accurate and separate from contract revenue and other revenue sources.<br /><br />The training also covers in-kind contributions, including contributed services and nonfinancial assets, and what must be disclosed about their nature, value, usage, and valuation methods. Additional ASC 606 disclosure requirements for non-public entities are summarized, such as contract balances, performance obligations, significant judgments, and revenue disaggregation.<br /><br />Finally, endowment disclosures are reviewed, including spending policies, donor-restricted versus board-designated endowments, rollforwards, and underwater endowment reporting. The document closes by noting that most NFP audit issues involve presentation, disclosure, and classification errors rather than calculation mistakes.

Keywords

ASC 958

not-for-profit entities

net asset classification

revenue recognition

gross presentation

liquidity disclosure

donor restrictions

in-kind contributions

ASC 606 disclosures

endowment reporting