Those of us who specialize in working with Nonprofit Organizations always keep an eye on the Not-for-Profit Advisory Committee (
NAC) of the Financial Accounting Standards Board (FASB). It is usually through the NAC that new guidance is developed and ultimately implemented, affecting nonprofit organizations’ financial reporting. The NAC is a standing committee that works closely with the FASB in an advisory capacity to ensure that perspectives from the not-for-profit (NFP) sector are effectively communicated to the FASB on a timely basis in connection with the development of financial accounting and reporting standards.
On March 20, 2025, the FASB Not-for-Profit (NFP) Advisory Committee held its semiannual meeting to discuss current and emerging financial reporting issues affecting the NFP sector. Key discussions centered on agenda consultation, recent standards implementation, select FASB projects, the research agenda, and sector-specific reporting challenges.
During the
Agenda Consultation, committee members identified several high-priority topics for future standard-setting. These included
- Developing standardized operating measures for NFPs.
- Revising consolidation guidance.
- Excluding NFPs with conduit or public debt from certain public entity definitions.
- Enhancing liquidity disclosures.
- Improving the statement of cash flows; and
- Requiring more detailed disaggregation of investment returns.
They also reviewed inconsistencies in accounting for public-private partnerships and concluded that accounting for below-market and interest-free loans is not a pressing concern.
In reviewing
recent standard implementations, members generally supported Topic 842 (Leases), noting increased transparency and comparability despite initial implementation costs. They also backed the proposed amendments under Topic 326 for credit losses, urging its scope to be expanded to include all NFPs.
The Committee provided feedback on
ongoing FASB projects, including support for clarifying derivative scope exceptions (Topic 815), modernizing software cost accounting (Subtopic 350-40), and general codification improvements. They recommended removing a specific paragraph (958-310-35-3) instead of finalizing its proposed amendment. Regarding environmental credit programs (Topic 818), members expressed support for enhanced disclosures relevant to analysts and suggested clarifying guidance for NFPs in Subtopic 958-605.
On the
research agenda, discussions highlighted challenges with accounting for intangibles, especially internally developed ones, due to cost and measurement difficulties.
Finally, in a
closed session, members reiterated the need for improved investment return disaggregation and cash flow presentation. They also highlighted inconsistencies between FASB and GASB standards and differences in guidance for government grants to NFPs versus business entities.
In conclusion, as documented by their minutes, the NAC meeting proceeded as usual. There appears to have been limited discussion addressing the current business climate, the challenges arising from uncertain federal funding activities, or challenges to the collectability of federal receivables. There was also no documented mention of a discussion of sector-specific risks related to the possibility of a recession. Attention now turns to the upcoming AICPA Nonprofit Conference in June, where stakeholders will be watching closely to see whether these issues and their potential impacts on the nonprofit sector are more thoroughly explored.
For more information or questions about this article or to find out how
Windes can assist, please contact our
Nonprofit Team at
[email protected].
This article was written by Windes Nonprofit Practice Leader Mike Barloewen.
Michael Barloewen, CPA, CGMAAudit & Assurance Services Partner [email protected]
