Read theFAS 117 Summary.pdfin this week's module, Week 6, (and any other research you do on your own) and comment on the following:

The Statement 117 requires a statement of financial position, a statement of activities, and a statement of cash flows. This standard has been in place since 1993. Explain why the financial statements discussed in 117 are necessary and why you believe this standard has lasted so many years without a revision.

FAS 117: Financial Statements of Not-for-Profit Organizations FAS 117 Summary This Statement establishes standards for general-purpose external financial statements provided by a not-for-profit organization. Its objective is to enhance the relevance, understandability, and comparability of financial statements issued by those organizations. It requires that those financial statements provide certain basic information that focuses on the entity as a whole and meets the common needs of external users of those statements. This Statement requires that all not-for-profit organizations provide a statement of financial position, a statement of activities, and a statement of cash flows. It requires reporting amounts for the organization's total assets, liabilities, and net assets in a statement of financial position; reporting the change in an organization's net assets in a statement of activities; and reporting the change in its cash and cash equivalents in a statement of cash flows. This Statement also requires classification of an organization's net assets and its revenues, expenses, gains, and losses based on the existence or absence of donorimposed restrictions. It requires that the amounts for each of three classes of net assetspermanently restricted, temporarily restricted, and unrestrictedbe displayed in a statement of financial position and that the amounts of change in each of those classes of net assets be displayed in a statement of activities. This Statement amends FASB Statement No. 95, Statement of Cash Flows, to extend its provisions to not-for-profit organizations and to expand its description of cash flows from financing activities to include certain donor-restricted cash that must be used for long-term purposes. It also requires that voluntary health and welfare organizations provide a statement of functional expenses that reports expenses by both functional and natural classifications. This Statement is effective for annual financial statements issued for fiscal years beginning after December 15, 1994, except for organizations with less than $5 million in total assets and less than $1 million in annual expenses. For those organizations, the Statement is effective for fiscal years beginning after December 15, 1995. Earlier application is encouraged.