Fall 2012 issue of Horizons

In situations where consolidated financial statements are not permitted, it may still be desirable to present the activities of the related organization. In such a scenario, it may be possible to present combined financial statements. Combined Statements GAAP contains rules that stipulate when combined financial statements may be utilized. Those rules stipulate that combined financial statements can be utilized when the entities to be combined are under common control or common management and combined financial statements are more meaningful than separate financial statements. The preparation of combined financial statements is similar to the preparation of consolidated financial statements so combined financial statements may be useful in situations where consolidation is not appropriate.

The consolidation and combination rules related to not-for-profit financial statements are complex. Further details, including numerous examples, are available in FASB’s Accounting Standards Codification which should be consulted whenever questions arise. Additionally, communicating with your accounting advisors can help avoid surprises when it comes time to prepare your organization’s financial statements. While FASB’s Not-for-Profit Advisory Committee (NAC) is studying improvements to financial reporting, including such topics as net asset classification and the statement of cash flows, as part of its agenda, re- examination of the consolidation rules for nonprofits is not currently part of NAC’s plan. As a result, no FASB action resulting in a change to these consolidation rules is expected in the near future.

RubinBrown’s Not-For-Profit Services Group As a recognized leader in the not-for-profit sector, we have the resources essential to serve arts and cultural organizations, foundations, private schools, religious organizations, social service agencies and trade and membership associations.

Judy Murphy, CPA – St. Louis Partner-In-Charge Not-For-Profit Services Group 314.290.3496 judy.murphy@rubinbrown.com

Evelyn Law, CPA – Denver Partner Not-For-Profit Services Group 303.952.1245 evelyn.law@rubinbrown.com

Sharon Latimer, CPA – Kansas City Partner Not-For-Profit Services Group 913.499.4407 sharon.latimer@rubinbrown.com

David Duckwitz, CPA – Kansas City Director Not-For-Profit Services Group 913.499.4433 david.duckwitz@rubinbrown.com

www.RubinBrown.com | page 19