To provide guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization (NPO) that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006, the Financial Accounting Standards Board (the Board) proposed FASB Staff Position (FSP) No. FAS 117-a, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures, in February 2008. McGladrey & Pullen, LLP supports the issuance of the proposed FSP and believes it would enhance the reporting of endowments. We have issued a comment letter related to the content and effective date of the FSP, which states that we believe the guidance for net asset classification of donor-restricted endowment funds is appropriate and can be consistently applied in practice.
Our comment letter includes our concern that many smaller organizations with years ending as soon as June 30, 2008 might find it difficult to meet all of the accounting and reporting requirements within such a limited time after the issuance of the final FSP. We believe an effective date of annual periods ending after December 15, 2008 for all NPOs is more reasonable. Alternatively, we suggested the Board consider a delayed effective date for NPOs under a certain size.
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