Hot Topic | March 2020

Restricted cash and cash equivalents in the statement of cash flows for not-for-profits

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Hot Topic highlights the implications of ASU 2016-18 for NFPs. The revisions change the presentation of restricted cash and restricted cash equivalents in the statement of cash flows.

Applicability

ASU 2016-18

  • All entities, including NFPs, that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows.

Relevant dates

  • Effective immediately

The amendments are currently effective for all entities. As a reminder, the effective dates for NFPs are as follows:

Effective date All entities, except public business entities

Annual periods – Fiscal years beginning after

December 15, 2018

Interim periods – Fiscal years beginning after

December 15, 2019

Transition method

Entities are required to apply the amendments in the ASU using a retrospective transition method to each period presented

 

Key impacts

  • Amounts generally described as restricted cash and restricted cash equivalents are required to be included in the total cash and cash equivalents in the statement of cash flows.
  • If cash and cash equivalents are presented in more than one line item on the balance sheet, the amounts and corresponding line items must be disclosed and reconciled to the total cash and cash equivalents shown in the statement of cash flows, either on the face of the statement of cash flows or in the notes to the financial statements.
  • NFPs will need to separately evaluate cash and cash equivalents on adoption of the ASU.
    • All cash is included in the total cash and cash equivalents in the statement of cash flows irrespective of its classification on the balance sheet and irrespective of its restrictions.
    • NFPs may establish a policy or be required to exclude certain short-term, highly liquid investments that would otherwise meet the definition of cash equivalents from the cash equivalents line item in both the balance sheet and statement of cash flows.

Report contents

  • Key impacts
  • Identifying restricted cash and restricted cash equivalents
  • Applying the amendments
  • Effective date

Related content

Handbook: Statement of cash flows

 

Spotlight on contributors

Joseph Bukzin

Joseph Bukzin

Partner, Audit, KPMG US

Lisa Hinkson

Lisa Hinkson

Partner, Dept. of Professional Practice, KPMG US

 

 

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