The Financial Accounting Standards Board has established a Not-for-Profit Advisory Committee to offer input to the board on guidance, current and future technical projects, and longer-term issues affecting nonprofits.
The NAC will complement some of FASBs other standing committees, including the Private Company Financial Reporting Committee and the Small Business Advisory Committee. FASB anticipates that the NAC will provide a discussion forum on critical issues affecting the not-for-profit sector. The NAC will also help FASB and its staff members communicate to the not-for-profit sector about recent and past guidance, current and proposed projects, and other issues of importance.
Jeffrey Mechanick, assistant director for non-public entities at FASB, explained that while the board primarily deals with standards for public companies, not-for-profits are key constituencies for the accounting standard-setter. In the past, FASB has created standards for changes in endowments and mergers and acquisitions pertaining to nonprofits. FASB has also been working on several joint convergence projects with the International Accounting Standards Board that could have an impact on nonprofits, including lease accounting, revenue recognition, and financial instruments.
We see this as a key way to engage in the public debate on how to proceed in this sector, said Mechanick.
The committee will initially contain 12 to 15 individuals from the not-for-profit sector, including financial report users, preparers, practitioners, and those with backgrounds in academia and the law who deal with the not-for-profit sector. The committee will include representatives from both large and small nonprofits of various kinds, including higher education, health care, charities and others. The Governmental Accounting Standards Board will continue to deal with accounting issues affecting government entities. FASB doesnt include certain tax-exempt entities such as credit unions under the not-for-profit umbrella.
Unlike the Private Company Financial Reporting Committee, the NAC will not be co-sponsored by the American Institute of CPAs. However, the AICPA will likely have an official participating observer on the committee.
FASB plans to form the new committee in early 2010 and the initial meeting will probably take place in mid-2010. The committee will likely meet two or three times per year, with meetings open to the public to the extent possible, and may be webcast.
FASB will begin seeking nominations for committee members in December. To participate in the nomination process, contact Jeffrey D. Mechanick at firstname.lastname@example.org or Alicia A. Posta at email@example.com.
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