New Liquidity Disclosures-
Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities requires organizations to disclose both qualitative and quantitative information about how the entity manages its liquid resources.
While the disclosure requirements may seem a bit daunting, NFPs should consider this an opportunity to share with their donors, board members, creditors, and other stakeholders their strategy for managing financial resources.
The ASU provides a few example disclosures but, as with everything in the NFP sector, one size does not fit all. With that in mind, we have created several example disclosures for a variety of NFP types. These disclosures take many forms depending on the type of NFP, the relative liquidity of the organization’s resources, donor-imposed restrictions on those resources, internal board designations on resources, and so on. These examples will help organizations consider how to adjust their liquidity disclosures to enhance transparency.