Wednesday, August 6, 2008

FASB Issues Guidance on Endowment Accounting

The FASB announced today that it has issued a final staff position statement on endowment accounting.  FSP FAS 117-1 provides guidance on the net asset classification of donor-restricted endowment funds of a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act, and also provides for enhanced disclosures for all endowment funds.

Draft guidance had been issued in February and the FASB received many comment letters which it considered before making changes to the draft guidance.  The final guidance recognizes the legal restrictions a donor intends when a donor contributes to an endowment fund, even one without a purpose restriction.  Under the final guidance much more of an endowment will be classified as "temporarily restricted" than has been the case in the past.  The accounting rules will thus be a better reflection of the legal rules. 

The FASB's press release says that the goal is "to improve the quality and consistency of financial reporting of endowments held by not-for-profit organizations."

The FSP is posted on the FASB's website.

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Comments

This is a nice article regarding the FASB. fASB had issued a Draft guidance. But afetr issuing the Draft guidance, they got severalcomment regerding Draft guidance .

Posted by: Uravashi | Jan 2, 2009 2:55:23 AM

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