By Denise Lugo
March 24 — All not-for-profit entities will be required to report all expenses—other than netted investment expenses—by both function and nature, together with an analysis of them, the Financial Accounting Standards Board said.
FASB March 23 said forthcoming rules for nonprofits' financial statements will require them to show all expenses by function and nature in one location, which means all functional expense categories would be broken down by nature of expense type.
Furthermore, the board decided all nonprofits should have flexibility in how they present the analysis of expenses. The analysis can be provided either on the face, in the notes or as a separate statement, FASB said.
The decisions are a change to a portion of what the board proposed about expenses in its April 2015 exposure draft, Not-for-Profit Entities (Topic 958) and Health Care Entities (Topic 954): Presentation of Financial Statements of Not-for-Profit Entities .
FASB's decisions also mean a change in accounting requirements for some nonprofits.
Under the proposal, FASB would have required all operating expenses to be arrayed by function and nature, but its March 23 decision means all expenses are to be arrayed that way.
Some nonprofits already do this today, but it's not a requirement for all. Currently it is only required in a statement format for voluntary health and welfare associations.
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