1.Complexities about the use of the currently required three classes of net assets that focus on the absence or presence of donor-imposed restrictions and whether those restrictions are temporary or permanent. Deficiencies in the utility of information provided to donors, creditors, and others in assessing an entity’s liquidity caused by potential misunderstandings and confusion about how restrictions or limits imposed by donors, laws, contracts, and governing boards affect an entity’s liquidity, classes of net assets, performance, and related terminology, particularly the term unrestricted net assets.
2. Inconsistencies in the reporting (or lack of reporting) of intermediate measures of operations in the statement of activities, including inconsistencies between that reporting and the reporting of operating cash flows in the statement of cash flows. Those inconsistencies cause difficulties in communicating and assessing an entity’s financial performance.
3. Inconsistencies in the type of information provided about expenses of the period—for example, some, but not all, NFPs provide information about operating expenses by both function and nature. And
4. Misunderstandings about and opportunities to enhance the utility of the statement of cash flows, particularly about the reporting of operating cash flows.
