April 5, 2008
Financial Accounting under UPMIFA
Time is running out to comment on the FASB's draft FSP on 117-a. The draft FSP provides guidance on how charities will report their endowment funds on financial statements. The FASB will accept comments until April 18. As written, the guidance will apply to financial statements for years ending after June 15, 2008. Given that lots of charities, including many (maybe most) universities and colleges operate on a June 30 fiscal year, the new guidance will affect a whole lot of endowments. The guidance provides direction for reporting endowment funds under UPMIFA, but it also directs charities to provide disclosures for endowment funds, regardless of whether a state has enacted UPMIFA.
We lawyers tend to find accounting rules puzzling. The financial statements are supposed to reflect legal restrictions imposed on funds, so in theory the legal rules are applied first and the accounting rules follow. Under UMIFA (the older version of UPMIFA) the accounting rules seemed (to this lawyer) to go their own way. The more conversation between lawyers and accountants on this topic, the better. The FASB is interested in getting lots of feedback, so it's important for some of us to step up and provide that feedback. Jack Siegel has already posted a particularly helpful comment, and five other comments appear on the FASB website. More will likely arrive in the next week.
TrackBack URL for this entry:
Listed below are links to weblogs that reference Financial Accounting under UPMIFA: