Discover expert insights on ASC 842 compliance for nonprofits, healthcare, and higher education. Learn best practices and lessons from Temple Management Consulting's experience.
As we approach 2025, nonprofit organizations are navigating an evolving landscape of audit requirements and best practices. Effective nonprofit audit preparation remains crucial for ensuring compliance, enhancing transparency, and maintaining stakeholder trust. In this comprehensive guide, we'll explore key aspects of preparing for your 2025 nonprofit audit, including lessons learned from recently implemented standards, emerging best practices, and strategies to navigate common challenges.
In 1993, FASB introduced SFAS 116 and 117. These standards revolutionized nonprofit financial reporting. They established guidelines for contribution recognition and financial statement presentation. For over two decades, these standards served as the backbone of nonprofit accounting. SFAS 116 focused on accounting for contributions received and made. It provided clear guidance on how to recognize and measure contributions, including distinguishing between conditional and unconditional promises to give. This standard significantly improved the consistency and comparability of contribution reporting across nonprofit organizations. SFAS 117 addressed the presentation of financial statements. It introduced the concept of three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. This classification system helped users of financial statements better understand the nature and extent of donor-imposed restrictions on a nonprofit's resources. However, the nonprofit sector has changed dramatically since 1993. New challenges and complexities emerged. The rise of social enterprises, increased scrutiny from donors and regulators, and the growing importance of impact measurement all contributed to a need for updated accounting standards. FASB recognized the need for updated standards to reflect these changes and better serve the evolving needs of nonprofit organizations and their stakeholders. Introducing ASU 2016-14: The New FASB Standards In August 2016, FASB released Accounting Standards Update (ASU) 2016-14. This update aims to improve nonprofit financial reporting. It became effective for fiscal years beginning after December 15, 2017. The new standards represent a significant shift in nonprofit financial reporting, addressing many of the challenges and limitations of the previous standards. Key Changes in ASU 2016-14 Net Asset Classification for Nonprofits ASU 2016-14 simplifies net asset classification. It reduces the categories from three to two: Net assets with donor restrictions Net assets without…
As the back-to-school season approaches, churches have a unique opportunity to positively impact their communities by aligning their financial resources with educational initiatives. This article aims to highlight the importance of strategic financial planning for church leaders, emphasizing how such efforts can support educational programs that benefit students and families in need.
A church's comprehensive financial report, carefully prepared by treasurers, sheds light on its financial health through key components like income statements, balance sheets, and budget comparisons. Supported by accurate accounting and bookkeeping, this report fosters transparency, trust, and informed decision-making, marking a path toward responsible stewardship and financial stability.
Effective financial management is crucial for the success and sustainability of nonprofit organizations. Unlike for-profit entities, nonprofits face unique financial challenges, including reliance on donations, grants, and other variable funding sources. This makes budgeting and cash flow management essential to maintaining operational stability and achieving long-term goals. Key concepts such as budgeting, cash flow management, and financial sustainability are not just financial jargon; they are the backbone of a nonprofit's ability to fulfill its mission and serve its community.
Outsourcing can be a gamble. But when it comes to your church’s finances, outsourced bookkeeping could be the best decision you make.
In uncertain or difficult times, strong decisions count more than ever. For nonprofits, this means that financial and business strategies need to be informed by data.
Wondering whether your church really needs accounting services? Here are 5 ways a virtual accountant can help improve your church finances.
Take a look at some of the ways you can assess your reporting system and make changes to adapt to your individual needs.
