Sfas 117 Case Study

SFAS 117 Ruling According to the Financial Accounting Standards Board (FASB), the purpose of SFAS 117 was to enhancing the relevance, understandability, and comparability of financial statements issued by nonprofit organizations (McLaughlin, 2009). The intention of the SFAS 117 was to make nonprofit organization financial statements readable as well as usable by stock holders of the nonprofit organization. With this being implemented there are now three types of funds which include; unrestricted, temporarily restricted, and finally permanently restricted (McLaughlin, 2009). These comprise the portion of net assets that result from contributions or other types of inflow of assets whose use is limited by restrictions placed by the original

SFAS 117 was intended to make nonprofit financial statements readable and also usable by stake holders of the nonprofit organizations themselves. There are three types of funds which include; unrestricted, temporarily restricted, and permanently restricted. Unrestricted is where the donor has not placed or imposed any conditions on the asset. Temporarily restricted net assets are those where the donor has placed a condition on the donation that must be met in order to be used and in certain cases this must be met in a certain time frame. A permanently restricted net asset is one in which the condition placed by the donor can never be met by the nonprofit organization.
St. Jude Children’s Hospital is a very well-known nonprofit organization that has been around for years. This organization fully complies with the SFAS 117 ruling. A full set of financial statements includes the following; a statement of financial position, a statement of activities, a statement of cash flows, accompanying notes, and a statement of functional expense.