Financial Accounting Standards Board (FASB) Nonprofit Advisory CommitteeDecember 05, 2011
What is the NAC and what are they up to?
To help you follow the changes that are coming in the not-for-profit financial reporting area you need to know who is involved. The Financial Accounting Standards Board (FASB) has created a Not-for-Profit Advisory Committee that is becoming known as the NAC.
The NAC was established in 2009 because the FASB believes that the not-for-profit organization is unique. It is not considered a public company but they are also not a private company due to their great public accountability requirement to exist. The Board of the not-for-profit is unlike the Board of the public company where they are a significant part of senior management. In the not-for-profit organization the Board is the liaison between the community it serves and the management that is running it on a day-to-day basis. The not-for-profit board is driving the public accountability wagon.
Now that we know why there is a NAC, what are they up to?
Well, in the spring of 2011 the NAC formed three working groups. These groups were charged with obtaining input from the nonprofit sector and providing guidance on proposed technical agenda projects to the FASB. The three groups that have been started are dealing with
- Reporting Financial Performance;
- Liquidity and Financial Health; and
- “Telling the Story” – helping the nonprofit communicate the agency’s story to the public and relating that to the annual financial report.
My next blog will explain what the FASB is doing with the NAC recommendations. What is definite, however, is that change is coming. Current financial reporting and communications from the not-for-profit world to the community that it serves are seen as improvable and changes will be mandated that will be billed as improvements. Just when you were finally starting to understand your current financial statements…