Non-Profit Organizations (Topic 958) Statement No.117

Statement No. 117 pertaining to Non-Profit Organizations was released by the Financial Accounting Standards Board (FASB) to set guidelines for external financial statements. Their objective of Statement No.117 was to clarify the non-profit’s financial statements to be more transparent, relevant, and comparable to others. This enables outside users of financial statements to have their needs met and for them to view the entity in its entirety.

Non-Profit entities are now required to provide a statement of financial position, a statement of activities, and a statement of cash flows and organizing them based on donor-imposed restrictions for the organization’s net assets, revenues, expenses, gains, and losses.

  • Statement No. 117 mandates reporting of the entity’s total assets, liabilities, and net assets in a separate statement of financial position accompanied with the amounts of each net asset separated by three categories: permanently restricted, temporarily restricted, and unrestricted.
  • Furthermore, this report notes any changes in their net assets in a statement of activities categorized by the three categories listed in the prior bullet.
  • It will also report the changes in their cash and cash equivalents in a statement of cash flows. Statement No. 117 is an amendment to FASB’s Topic Statement No. 95 concerning Topic 230 – Statement of Cash Flows. Statement No. 117 extends Statement No. 95 to include non-profit organizations and their donor-restricted cash utilized for long-term activities.
  • It also extends to organizations that specialize in voluntary health and welfare to provide a statement that reports expenses classified by functional and natural classifications on a statement of functional expenses.

Financial statements need organization and precision to be true to the non-profit organization. Statement No.117 assists in this goal by providing standards for these statements to keep uniformity among them allowing organizations to receive the assistance they need.