Making your Financial Statements Tell the Truth, and the Story

What’s Better? 2

Your Presenters: Lisa H. Kruger, Chief Financial Officer, United Way of Central New Mexico (Albuquerque, NM) Krista Ivey, Assistant Controller, Valley of the Sun United Way, (Phoenix, AZ) Ken Euwema, Director-Member Financial Accountability, United Way Worldwide (Alexandria, VA) Brandon R. Booker, VP of Finance & Controller, United Way of Tarrant County, (Fort Worth, TX) 3

Agenda Context Telling the Truth Telling your Story Your Questions 4

Context 5

Assumptions 1.We all prepare financial statements in line with GAAP 2.We all fill out a disclosure checklist to help us figure out what disclosures are required 3.The primary users of our financial statements are the Board members (representative of the community of donors) and a.All have some knowledge of GAAP b.Some have a lot of knowledge of GAAP 4.Other users of our financial statements may or may not know GAAP but they are all looking for something specific.

Lots of Discussion at FASB Nonprofit Financial Statements Standard Setting Project: Operating Measures Net Asset Classes Statement Format Liquidity Telling the Story Research Project Use of XBRL (eXtensible Business Reporting Language) within the NFP Sector Discussion Going Concern Disclosures Standard Setting Project Disclosure Framework Project 7

Objective: Improve effectiveness of footnote disclosures by clearly communicating information most important to users Two components that will result in separate Exposure Drafts 1.Financial Accounting Standards Board’s Decisions Process Series of decision questions for the Board to identify relevant disclosures Define the purpose of the notes and the type of information to include in the notes 2.Entity’s Board Decision Process On-going Field Study to understand how discretion works in practice 8

So, for each of the following examples... we will go beyond just looking at what’s required and attempt to answer this question: “How can we simplify or add value for our users?” 9

Telling the Truth… (or at least not misleading the user unintentionally) 10

Do You Use Consistent and Easily Understood Descriptors/Terms?

12 What is the difference between these?

Maybe the footnotes will help… 13 Kind of but... How does this relate to the second note? Are they different or the same things?

14 How much of this is really “available” to use?

15 This is better but I still don’t know what working capital is… Maybe the notes will tell me…

16 Not so much… I have to believe some of this isn’t really “available.

17 Now this is clear.

18 Oops…

19 This makes more sense than saying “Less Designations”, but…

20 What is the difference ? Can be a bit confusing, no?

Is there such a thing as Too Much Information?

22 This is a lot of “white space”

23 What’s the “value add” here?

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25

26 As my kids say, “TMI dad”

27 Seriously, a whole column for this?

Do the “Dots” Connect?

29 Great breakdown but… Can you reconcile this to …

30 This?

31 This one connects based on this line…

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33 The terms don’t line up, do they?

34 Something else is lost in translation… can you spot it?

35 “Textbook” format and the total ties…

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37 Not really telling you about our impact priorities is it?

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Do the Notes really “tell the story”?

40 This is cool, I wonder what they got?

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42 Ah, now that tells the story.

Telling Your Story 43

Why are our Notes “Boiler Plate” Accounting Speak? 44

Boiler Plate 45 Blah, Blah, Blah… so begins 5 pages of notes, on investments, including 3 pages just talking about the retirement plans.

Speak in terms everyone understands! 46

And remember, sometimes “less is more”… Why say all this: When this would really do: 47

But not always… 48

Paint a picture… 49

Tell your Story… 50

Tell users what you need them to know about you… 51

52 Seriously, if we are about impact, is this what we “need” people to know?

Questions?

Thank You! Lisa H. Kruger - Krista Ivey - Brandon Booker – Ken Euwema –