This post was last updated on May 26th, 2022 at 11:10 am.
Icon Systems Inc felt it was important to have their church accounting software reviewed by an outside CPA firm. Why? To ensure we were delivering the most comprehensive software that is available today for churches. There are many companies out there that tout their products are far more superior. However, few have actually been reviewed by a 3rd party company to see if their software adheres to the ASC 958.
The FASB 95 Explained
What Does FASB 95 Do?
The statement of cash flows helps organizations like churches understand how the financial resources are coming into and out of the organization over a period of time rather than at a specific point in time like other financial statements. It also tells the organization if they generated cash. This differs from the income statement where it can tell you if an organization made a profit. You could have an organization that made a considerable amount of money (inflow of cash) but still be in debt according to the income statement because of start-up costs or other things. While the FASB 95 does not require the cash flow document the FASB 117 corrects this oversight and extends the requirement to not-for-profits.
The FASB 117 and Why It’s Needed
The FASB 117 regulation requires all not-for-profits (nonprofits) to provide the following:
- statement of financial position
- statement of activities
- statement of cash flows
The FASB 117 was codified into the ASC 958 regulation along with several other accounting standards.
Requirements of FASB 117
Some of the requirements in this regulation state the following.
It requires reporting amounts for the organization’s total assets, liabilities, and net assets in a statement of financial position; reporting the change in an organization’s net assets in a statement of activities; and reporting the change in its cash and cash equivalents in a statement of cash flows.
It requires that the amounts for each of three classes of net assets—permanently restricted, temporarily restricted, and unrestricted—be displayed in a statement of financial position and that the amounts of change in each of those classes of net assets be displayed in a statement of activities.
Because of these regulations that nonprofits should adhere to is the reason we had our church accounting software reviewed. See our more in depth post and the accompanying links! If you have any questions as to these issues please give us a call at 1-800-596-4266 or visit our website. You can also email us at email@example.com