FASB 117

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The Financial Accounting Standards Board (F.A.S.B.) addressed the need to present a clear, overall picture of a not-for-profit organization in FASB 117. Previously, the true financial position of a not-for-profit could be easily obscured by a multitude of separate finance Funds. FASB 117 does not disallow the use of Fund Accounting, but overlays a method of presenting a fair financial picture of the organization as a whole.

Shepherd’s Staff provides two methods of recording donations restricted for a particular purpose: Dedicated Accounts and separate Finance Funds. FASB 117 in Shepherd’s Staff continues to support these structures, but adds a restriction status. A donation given for a particular purpose can now be shown as temporarily restricted or as permanently restricted, giving additional information to the users of your financial statements.

Most donations given for a particular purpose will be temporarily restricted. Permanently restricted status is normally reserved for legally restricted endowments where the principal can never be spent, only the interest and dividends earned by the principal.

FASB 117 is optional and the decision to implement it should be made with the advice of an Accounting professional, preferably specializing in the not-for-profit sector.

Because of the far-reaching implications of this feature, only a System Administrator or a Finance Supervisor can turn on or off FASB 117.

  1. Exit the Finance module.
  2. Go to Utilities from the Shepherd’s Staff Main Menu. Select Settings, then the Finance tab
  3. Check the Enable FASB 117 check box.
  4. Click OK to save the change.
  5. In Finance, a new report, “FASB 117 Reports,” appears in the report list. See the page on “FASB 117 Reports” for more information.
  6. Additional options appear when adding or editing certain Funds and Accounts: Cash Flow Group and Restriction Status. 
  7. Cash Flow Group determines where the asset and liability account balances fall in the Statement of Cash Flows. 
  8. Restriction Status applies to Funds other than Fund 01 (which is always Unrestricted). Restriction Status also applies to Dedicated Accounts, but only if those Accounts are in Fund 01. All other Dedicated Accounts in other Funds take on the Restriction Status of the Fund.
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