SPD 1 Index 340.10 : Nonprofit Organization Disclosure Checklist Updated through January 31, 2015 Organization: Society of Insurance Research Statement of Financial Position Date: 12/31/2015 Prepared by: ZMW Date: 4/12/16 Explanatory Comments This is a checklist of the primary disclosures required by accounting principles generally accepted in the United States of America (GAAP) for financial statements of (1) voluntary health and welfare organizations and (2) other nonprofit organizations except those that are business-oriented hospitals and other providers of health care services, state and local governmental units and governmental nonprofit organizations (including governmental colleges and universities), and entities that operate essentially as commercial businesses for the direct economic benefit of members or stockholders, such as employee benefit plans, mutual insurance companies, apartment cooperatives, and homeowners and condominium associations. Obligors of conduit debt securities that are traded in a public market should make the additional disclosures that are required for public entities by GAAP. Note that this is a disclosure checklist, not a GAAP application checklist; accordingly, GAAP application, presentation, and measurement questions generally are not included. Most checklist questions include the relevant citation of the FASB Accounting Standards Codification (FASB ASC). The FASB ASC is the single source of authoritative nongovernmental U.S. accounting and reporting standards (other than SEC guidance). This checklist incorporates Accounting Standards Updates (ASUs) of the FASB ASC. An occasional reference is made to auditing standards (AU-C sections) published by the AICPA. Disclosure guidelines for certain financial statement items are in auditing standards. Inclusion of those disclosures without regard to whether the financial statements are audited or unaudited is generally accepted practice. Some checklist questions do not cite a specific authoritative reference but indicate that the disclosure is accepted practice. Many organizations disclose that information even though a specific requirement in authoritative literature cannot be identified. With the exception of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), discussed in the following paragraphs, this checklist is current through ASU 2015-10, Technical Corrections and Improvements (June 2015). ASU 2014-09 was issued in May 2014, and is effective for nonpublic entities, including most nonprofit organizations, for years beginning after December 15, 2017, and interim periods within years beginning after December 15, 2018. Although a nonprofit organization may elect to apply the guidance earlier, the earliest it may be applied is for a year beginning after December 15, 2016, and interim periods within that year. (In April 2015, the FASB issued a proposed ASU that would defer the effective date of ASU 2014-09 by one year. Nonpublic entities would apply the guidance in ASU 2014-09 in years beginning after December 15, 2018, and interim periods within years beginning after December 15, 2019. The proposed ASU would allow nonpublic entities, including most nonprofit organizations, to adopt ASU 2014-09 early, but no earlier than years beginning after December 15, 2016. The comment deadline on the proposed ASU ended on May 29, 2015.) When effective, ASU 2014-09 will supersede the revenue recognition requirements in FASB ASC 605, Revenue Recognition(link), and most industry-specific guidance throughout the industry Topics of the FASB ASC. (However, the standards for the recognition of revenue from contributions by nonprofit organizations will be retained in FASB ASC 958-605, which will be re-titled Not-for-profit Entities-Revenue Recognition-Contributions when ASU 2014-09 is effective.) Due to the delayed effective date(s) of ASU 2014-09, this checklist does not incorporate the disclosure requirements and associated amendments of the ASU. A future disclosure checklist will incorporate such
2 requirements and changes as the effective date nears. Users may download the ASU from the FASB s website at www.fasb.org or from Checkpoint at checkpoint.riag.com. The 2015 editions of PPC s Guide to Nonprofit GAAP and PPC s Guide to Preparing Nonprofit Financial Statements provide a summary of the ASU. Instructions A box has been provided for each major disclosure caption. If the major caption is not applicable to your client, simply place a checkmark in the box. It will then not be necessary to check N/A for each question under the major caption. Otherwise, respond to each question with a checkmark in the appropriate column: (1) Yes disclosure made; (2) No item present but no disclosure made (any item checked No should be explained in the checklist or in a separate memorandum); or (3) N/A either the item is not present or it is immaterial to the financial statements. SPD
SPD PART I-MOST FREQUENT DISCLOSURES FOR NONPROFIT ORGANIZATIONS STATEMENT OF FINANCIAL POSITION CLASSIFICATION OF ASSETS AND LIABILITIES Organizations are not required under FASB ASC 958 to present a classified statement of financial position. However, the presentation of a classified statement of financial position is one way to provide information on liquidity in accordance with FASB ASC 958. If an organization elects to present a classified statement of financial position, this disclosure checklist contains items that should be considered in the preparation of the statement. Those matters might also need to be considered in the sequencing of assets on an unclassified statement of financial position or for disclosure in the notes to the financial statements. 1. Do the notes to the financial statements disclose the liquidity or maturity of assets and liabilities (including restrictions on the use of particular items) if that information is not clear from the order of presenting assets and liabilities in the statement of financial position or if they have not been classified as current or noncurrent? (FASB ASC 958-210-45-8; 958-210-50-1) 2. If a classified statement of financial position is used, is a total of current assets presented? (Accepted practice) 3. If the organization has cash, cash equivalents, or other assets either (a) designated for long-term purposes or (b) received with donor-imposed restrictions limiting their use to long-term purposes, are such amounts reported separately from cash or other assets that are available for current operations, and do the notes to the financial statements describe the kind of asset if its nature is not clear from the description on the face of the statement of financial position (for example, cash restricted to investment in property and equipment)? (FASB ASC 210-10-45-4; 958-210-45-6; 958-210-50-3) 4. Are any agreements limiting or restricting the use of particular assets disclosed? (FASB ASC 958-210-45-7; 958-210-50-3) 5. Does the statement of financial position report total assets, liabilities, and net assets as well as separate amounts for each of the three classes of net assets with captions used to describe their meaning? (FASB ASC 958-205-45-15; 958-210-45-1; 958-210-45-9; 958-210-55-3 and 55-4) CASH 1. Is cash or cash and cash equivalents included as a separate caption on the statement of financial position? (Accepted practice) 2. Are the nature and amounts of restrictions (including donor imposed restrictions) or limitations on the organization s use of cash and cash equivalents (such as cash held for others under agency agreements) properly disclosed if the information is not displayed in the statement of financial position? (FASB ASC 958-210-45-7; 958-210-50-3) 3. Are requirements to hold cash in separate accounts disclosed? (FASB ASC 958-210-50-2) 4. Are amounts designated or donor-restricted for long-term purposes appropriately segregated from other cash items and shown as a noncurrent asset, if appropriate? (FASB ASC 958-210-45-6; 958-210-50-3) 5. Are material bank overdrafts presented as a separate caption among current
4 liabilities? Similarly, are material dollar amounts of held checks (checks on the bank reconciliation but not released until after the statement of financial position date) reclassified as accounts payable? (Accepted practice) 6. Are significant concentrations of credit risk arising from cash deposits in excess of federally insured limits disclosed? (See FINANCIAL INSTRUMENTS-Concentrations of Credit Risk.) 7. If significant liquidity problems exist, or the organization has not maintained necessary amounts of cash (or equivalents) to comply with donor restrictions, has disclosure been made? (FASB ASC 958-210-50-2) CURRENT LIABILITIES (EXCEPT INCOME TAXES) SPD 1. If a classified statement of financial position is presented, is a total of current liabilities presented? (FASB ASC 210-10-45-5) 2. Are significant categories of liabilities segregated (for example, accounts payable, accrued expenses, refundable advances, grants payable, deferred revenue, and amounts due to employees or directors)? (Accepted practice) 3. If the organization has not accrued compensated absences because the amount cannot be reasonably estimated, has that fact been disclosed? (FASB ASC 710-10-50-1) 4. If real and personal property tax accruals are subject to a substantial measure of uncertainty, has the liability been disclosed as an estimate? (FASB ASC 720-30-45-1) 5. Has disclosure been made of special borrowing arrangements? (FASB ASC 958-210-50-2) 6. See NOTES PAYABLE, LONG-TERM DEBT, AND OTHER OBLIGATIONS, for presentation of interfund payables. 7. If a recipient organization in an agency transaction receives nonfinancial assets and recognizes the assets and the liability, has the organization disclosed its policy for recognizing the nonfinancial assets? (FASB ASC 958-605-50-4) INCOME TAXES 1. Is information about the organization s income tax status disclosed, such as the Internal Revenue Code section under which it is exempt from federal income taxes or excise taxes? (Accepted practice) 2. Is the amount of income tax expense and the nature of the activities resulting in the income tax disclosed? (FASB ASC 958-720-50-1) 3. Is the amount of excise tax expense on net investment income disclosed? (Accepted practice) 4. Have the total amounts of interest and penalties recognized in the statement of activities and the statement of financial position been disclosed for each period presented? (FASB ASC 740-10-50-15) 5. Are the classifications and disclosures required by FASB ASC 740 made with respect to excise taxes on net investment income or to activities that are subject to unrelated business income tax? (See INCOME TAXES in Part II.) 6. See INCOME TAXES and INCOME TAXES-SPECIAL AREAS in Part II for other disclosures related to income taxes.
SPD NET ASSETS 1. Has information about the nature and amounts of different types of permanent restrictions or temporary restrictions been provided either in the notes or on the face of the statement of financial position? (FASB ASC 958-210-45-9 and 45-10; 958-210-50-3) 2. Is information about significant limits on unrestricted net assets disclosed, such as the following: (FASB ASC 958-210-50-2; 958-30-50-3) a. Limits resulting from loan covenants? b. Limits in contracts with suppliers, creditors, and others? c. Self-imposed limits, such as voluntary resolutions of the board of directors? 3. If the organization uses fund accounting for external reporting purposes, are interfund transfers shown as a change in fund balance? (Accepted practice) 4. See CLASSIFICATION OF ASSETS AND LIABILITIES, for disclosure of total net assets and separate amounts for each of the three classes of net assets. 5. See INVESTMENTS-Endowment Funds, for disclosures for board-designated and donor-restricted endowment funds. STATEMENT OF ACTIVITIES NOTE: Some statement of activities disclosures have already been addressed in the section on statement of financial position related disclosures. GENERAL 1. Does the statement of activities provide a description of the organization s activities, including a description of each of its major classes of programs (for example, by using column headings) if the description is not provided in the notes to the financial statements? (FASB ASC 958-205-50-1) 2. Does the statement of activities report the amount of change in net assets for the period for the organization as a whole (using a descriptive term such as change in net assets or change in equity ), and does that amount reconcile to the net assets reported in the statement of financial position? (FASB ASC 958-225-45-1 and 45-2) 3. Does the statement of activities report the amount of change in permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets for the period? (FASB ASC 958-225-45-1) 4. Does the statement of activities report: a. Revenues as increases in unrestricted net assets unless there are donorimposed restrictions limiting the use of the assets received? (FASB ASC 958-225-45-5) b. Expenses as decreases in unrestricted net assets? (FASB ASC 958-225-45-7) c. Events that simultaneously increase one class of net assets and decrease another (reclassifications), including expiration of donor-imposed restrictions, separately from revenues, expenses, gains, and losses? (FASB ASC 958-225-45-3) d. Gains and losses as increases or decreases in unrestricted net assets
6 unless a donor or law temporarily or permanently restricts their use? (FASB ASC 958-225-45-8) 5. Do the notes describe the nature of (or items excluded from) the term operations if the organization s use of the term is not apparent from the details provided on the face of the statement of activities? (FASB ASC 958-225-50-1) 6. If the organization reports an intermediate measure of operations, is the intermediate measure reported in a financial statement that, at a minimum, reports the change in unrestricted net assets for the period? (FASB ASC 958-225-45-9 and 45-10; 958-225-45-12; 958-225-50-1) NOTE: After adoption of ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, (1) the reference to extraordinary items from FASB ASC 958-225-55-7 in Question No. 7 will be eliminated and (2) Question No. 8 will be replaced by Question No. 9. ASU 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. (See EXTRAORDINARY ITEMS-PERIODS BEGINNING AFTER DECEMBER 15, 2015.) SPD 7. Does the statement of activities include a subtotal for the change in each net asset class before the effects of extraordinary items, discontinued operations, or accounting changes? (FASB ASC 958-225-55-7) 8. For periods beginning on or before December 15, 2015, are material events or transactions that are either unusual in nature or of infrequent occurrence, but not both (and therefore not meeting the criteria for extraordinary items): (FASB ASC 225-20-45-16; 225-20-50-3) a. Reported as a separate component of the change in net assets? b. Accompanied by disclosure of the nature and financial effects of each event? 9. For periods beginning after December 15, 2015, for material events or transactions considered to be of an unusual nature or a type that indicates infrequency of occurrence or both: (FASB ASC 225-20-45-16; 225-20-50-3) a. Are they reported as a separate component of the change in net assets? b. Are the nature and financial effects of each event or transaction either presented as a separate component of the change in net assets or disclosed in the notes to the financial statements? EXPENSES, GAINS, AND LOSSES 1. Are expenses reported by their functional classification (such as major classes of program services and supporting activities) either on the face of the statement of activities or in the notes to the financial statements? (FASB ASC 958-720-45-2) 2. Are total program costs disclosed if its components are not evident from the captions used on the face of the statement of activities, including information about why the amount disclosed does not agree with that reflected on the statement of activities, or cannot be easily determined from amounts on the statement of activities? (FASB ASC 958-720-50-1) 3. Is the total cost of all fund-raising activities disclosed? (FASB ASC 958-720-50-1)
SPD 4. If a ratio of fund-raising expenses to amounts raised is disclosed, is the method used to compute that ratio also disclosed? (FASB ASC 958-205-50-3) 5. If joint costs incurred in activities that include fund raising have been allocated, have the following been disclosed: (FASB ASC 958-720-50-2) a. The types of activities that resulted in joint costs? b. The fact that such costs have been allocated? c. The total amount allocated during the period and portion allocated to each functional expense category? d. The amount of joint costs for each type of joint activity (encouraged, but not required)? 6. Are payments to related local and national nonprofit organizations that cannot be allocated to functional expense classifications reported as a separate support services line item on the statement of activities captioned unallocated payments to local (or national or affiliated) organizations? (FASB ASC 958-720-45-26) 7. Are cost of goods sold and expenses shown net of purchase discounts? (Accepted practice) 8. Are discounts given in exchange for goods or services provided to the organization reported as expenses in the same functional category as the cost of the goods or services provided to the organization? (FASB ASC 958-720-45-23) 9. For each accounting period presented, have the following been disclosed: (FASB ASC 835-20-50-1; 470-40-25-3) a. The total amount of interest costs incurred, with separate identification of interest costs associated with product financing arrangements? b. The total amount of interest charged to expense? c. The total amount of interest capitalized? 10. Is the policy for classifying shipping and handling costs disclosed? (If shipping and handling costs are significant and are not included in cost of sales, the amount of such costs and the line item on the statement of activities that includes such costs also should be disclosed.) (FASB ASC 605-45-50-2) 11. Are all accrued net losses on firm purchase commitments for inventory separately disclosed in the statement of activities? (FASB ASC 330-10-50-5) STATEMENT OF CASH FLOWS 1. Are noncash investing and financing transactions disclosed either in narrative form or summarized in a schedule and do they clearly relate the cash and noncash aspects of such transactions? (FASB ASC 230-10-50-3) 2. Is the accounting policy for determining which items are treated as cash and cash equivalents disclosed? (FASB ASC 230-10-50-1; 958-230-55-2) 3. If the indirect method of reporting cash flows from operating activities is used, are amounts of interest paid (net of amounts capitalized) and income taxes paid, if any, during the period disclosed? (FASB ASC 230-10-45-29; 230-10-50-2) 4. If cash flows from derivative instruments that are accounted for as fair value hedges are classified in the same category as cash flows from the item being
8 hedged, is that accounting policy disclosed? (FASB ASC 230-10-45-27) 5. Are short-term highly liquid investments excluded from cash equivalents if they are purchased with contributions that are restricted by the donor to long-term investment (for example, investment in fixed assets or invested in perpetuity)? (FASB ASC 958-230-55-2) SPD GENERAL FINANCIAL STATEMENT DISCLOSURES NOTE: These are additional note disclosures that have not been addressed in previous checklist questions. DATE OF MANAGEMENT S REVIEW 1. Have the following been disclosed: (FASB ASC 855-10-50-1) a. The date through which subsequent events were evaluated? b. Whether the date in item (a) is the financial statement issuance date or the date the financial statements were available to be issued? 2. In revised financial statements, have the dates through which subsequent events were evaluated for both the original and revised financial statements been disclosed? (FASB ASC 855-10-50-4) NATURE OF ACTIVITIES NOTE: ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, amends the disclosures in Question No. 1 to indicate that they apply to entities that have commenced planned principal operations and adds the requirement in Question No. 2 for entities that have not commenced principal operations. The guidance should be applied prospectively and is effective for years beginning after December 15, 2014, and for interim periods beginning after December 15, 2015. Early adoption is permitted for financial statements that have not yet been made available for issuance. (FASB ASC 915-10-65-1) 1. Have the following disclosures about an organization s services or products been made: (FASB ASC 275-10-50-2) (For years beginning after December 15, 2014, and for interim periods beginning after December 15, 2015, these disclosures are only required for organizations that have commenced planned principal operations.) a. A description of the principal services the organization performs or the major products the organization sells and its principal markets, including the location of those markets? b. Sources of revenue for the organization s services? c. If the organization operates in more than one business, the relative importance of its activities in each business and the basis for that determination (for example, based on assets, revenues, or change in net assets)? 2. For years beginning after December 15, 2014, and for interim periods beginning after December 15, 2015, if the organization has not commenced principal operations have disclosures been made about the risks and uncertainties related to the organization s current activities and what those activities are being directed toward? (FASB ASC 275-10-50-2A)
SPD USE OF ESTIMATES 1. Has the fact that preparation of financial statements in conformity with GAAP requires the use of management s estimates been disclosed? (FASB ASC 275-10-50-4) 2. Have the required disclosures been made for significant estimates if it is at least reasonably possible that the estimates will change within one year of the date of the financial statements due to one or more confirming events and the effect of that change would be material? (See CONTINGENCIES, RISKS, AND UNCERTAINTIES.) ACCOUNTING POLICIES 1. Are all significant accounting policies presented as an integral part of the financial statements (disclosure is preferred in a separate summary of significant accounting policies preceding the notes or in the first note)? (Such policies should include those for which there is a selection from existing acceptable alternatives, principles, and methods peculiar to the industry in which the organization operates, and unusual or innovative applications of GAAP or methods of application.) (FASB ASC 235-10-50-1) SUBSEQUENT EVENTS 1. For subsequent events that provide evidence about conditions that did not exist at the date of the statement of financial position, but arose after that date, are the following disclosed to keep the financial statements from being misleading: (FASB ASC 450-20-50-9; 855-10-50-2) a. The nature of the event? b. Estimate of its financial effect or range of loss or a statement that such an estimate cannot be made? 2. For significant nonrecognized subsequent events, has consideration been given to whether the disclosure can best be made through supplemental pro forma financial data either in the notes or in columnar form on the face of the financial statements? (FASB ASC 855-10-50-3) 3. If a change in an organization s tax status becomes effective after year end but before the financial statements are available to be issued, are proper disclosures made? (FASB ASC 740-10-50-4) 4. If a material business combination is completed after the statement of financial position date but before the financial statements are available to be issued, has the required information been disclosed, if practicable? (See Part II, BUSINESS COMBINATIONS-Acquisitions.) 5. Have the disclosures for DATE OF MANAGEMENT S REVIEW, been made?
10 SPD PART II-OTHER DISCLOSURES ADVERTISING COSTS 1. Have the following disclosures about direct-response advertising been made: (FASB ASC 340-20-50-1) a. A description of the direct-response advertising that is capitalized? b. The accounting policy for it? c. The amortization period? 2. For nondirect-response advertising costs, has the policy about whether those costs are expensed as incurred or expensed the first time the advertising takes place been disclosed? (FASB ASC 340-20-50-1; 720-35-50-1) 3. Have the total advertising costs charged to expense for each statement of activities presented been disclosed? (FASB ASC 340-20-50-1; 720-35-50-1) 4. Have any write-downs of capitalized advertising to net realizable value been disclosed? (FASB ASC 340-20-50-1) 5. Has the total amount of capitalized advertising included in each statement of financial position presented been disclosed? (FASB ASC 340-20-50-1) 6. Has the amount of revenue and expense recognized from advertising barter transactions been disclosed for each statement of activities period presented? (If the fair value of such transactions is not determinable, has information regarding the volume and type of advertising surrendered and received been disclosed for each statement of activities presented?) (FASB ASC 605-20-50-1 )