FASB PROPOSES GUIDANCE ON NONPROFIT ENDOWMENTSThe Financial Accounting Standards Board has issued a proposed FASB staff position on the endowments of nonprofit organizations that could have large implications for how those organizations recognize their assets and use donor-restricted funds.
FSP 117-a, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures, provides guidance on classifying the net assets and equity associated with donor-restricted endowment funds that are subject to an enacted version of UPMIFA.
The issues in the FSP could have widespread importance in the nonprofit sector, especially for organizations with sizeable endowments, and the users of their financial statements, such as donors, credit rating agencies and regulators. FASB project manager Jeffrey Mechanick noted that the adoption of UPMIFA has raised significant questions about the reporting of donor-restricted endowment funds.
“Organizations across the country now find themselves subject to increased public scrutiny on how they manage and use their endowments, which in many instances have seen tremendous growth over the past decade,” he said in a statement.
The provisions of the FSP will be effective for fiscal years ending after June 15, 2008.
BOOKHAM JETTISONS E&Y
Bookham Inc., a San Jose, Calif.-based provider of optical components for a number of industries, has dismissed Big Four firm Ernst & Young as its auditor. The company named Grant Thornton as its new independent accountant.
Ernst & Young’s reports on the company’s last two fiscal years included an opinion casting a substantial doubt on Bookham’s ability to continue as a “going concern.”
CONSOL CANS PWC
Consol Energy Inc., a Pittsburgh-based provider of multi-fuel energy and energy services, dismissed Big Four firm PricewaterhouseCoopers as its auditor and named Ernst & Young as its replacement. In a federal filing, Consol said that there were no disagreements with PwC on any accounting matters, and that PwC’s reports on its financials for the years ended Dec. 31, 2006 and 2007, did not contain adverse opinions or disclaimers of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
