Not-for-Profit Advisory Committee (NAC)

News Release—October 3, 2011—FASB Not-for-Profit Advisory Committee Recommends Improvements to Financial Reporting

Overview and Primary Functions of the Committee

The Financial Accounting Standards Board (FASB or Board) has a long-standing commitment to the not-for-profit sector as part of the FASB’s standard-setting process for U.S. generally accepted accounting principles (GAAP). Over the years, the FASB has addressed the accounting and reporting needs of the sector, both for transactions that are unique to the sector (e.g., contributions received) and for transactions that it has in common with public and private business enterprises (e.g., employee postretirement benefit obligations). A few years ago, the FASB added a staff member dedicated to advising the Board and other staff on issues pertinent to the not-for-profit sector and communicating with members of the sector. To reinforce and broaden such consultation and communication, in October 2009 the FASB approved the creation of a Not-for-Profit Advisory Committee.

The primary functions of the Committee are to:

  • Provide focused input and feedback to the FASB Board and staff on existing guidance, current and proposed technical agenda projects, and longer-term issues (e.g., the alternatives and recommended course for the financial reporting for not-for-profit entities if the SEC mandates IFRS for public business entities)
  • Assist the FASB Board and staff in its communication and outreach activities to the not-for-profit sector about recent and other existing guidance, current and proposed projects, and longer-term issues.

Committee Composition and Terms

The Committee will consist of approximately 15 members who possess a keen interest in financial accounting and reporting matters and appropriate knowledge, experience, and demonstrated commitment to the not-for-profit sector. The Committee will include a mix of individuals that use not-for-profit financial statements to make lending, granting, and other resource allocation decisions; individuals that prepare financial statements for not-for-profit organizations; and auditors of not-for-profit financial statements, as well as individuals from the academic and legal communities. The FASB will consider the following dimensions of diversity in the Committee’s membership to the extent possible, given its size:
  • Subsector (higher education, healthcare, public charity, other)
  • Size (large and small not-for-profit organizations and accounting firms)
  • Type of user (donors, creditors, other)
  • Geography, gender, race/ethnicity
The Committee chair is the FASB’s Assistant Director for Nonpublic Entities (Jeffrey Mechanick), and a liaising FASB Board member (Larry Smith) will attend all meetings. To further enrich the Committee’s discussions, the FASB will invite other individuals, such as key regulatory representatives and a member of the AICPA’s technical staff, to attend meetings as participating observers.

As with other FASB advisory groups created by the FASB, Committee members will be appointed by the FASB chairman. Member terms are for three years, although initially the term may be longer or shorter for some members, in order to establish an orderly rotation to maintain future continuity.

Meetings

The Committee will hold advisory meetings two or three times per year that will serve as the primary forum for the Committee’s work.  Periodic conference calls also may be held between meetings if, and as, necessary.

The meetings generally will be a full day to one-and-one-half days each and will include an annual session with the full Board. Meetings generally will be held at the FASB’s offices in Norwalk, Connecticut, although, meetings in other locations, such as Washington, DC, may be held from time to time.

Meetings will be open to the public and webcast, to the extent possible, with the opportunity to meet in closed session to discuss administrative matters, as necessary.