SFAS no. 117 brings uniformity to financial statement formats - Statement of Financial Accounting Standards

Healthcare Financial Management, June, 1995 by David T. Meeting, Randall W. Luecke, Melissa Rogers

The statement of cash flows

SFAS No. 117 lifts the exemption that not-for-profit organizations have previously enjoyed with respect to SFAS No. 95, Statement of Cash Flows, but does not affect those healthcare organizations that already have been providing a statement of cash flow in accordance with SFAS No. 95. However, there is one change. Restricted donations and income earned by restricted funds are to be recorded as a financing activity, as opposed to the current treatment as an operating activity. Exhibits 5 and 6 illustrate comparative statements of cash flows under the current and new methods. The reclassification of restricted contributions and interest income to financing activities and reconciliation of change in net assets in place of excess of revenue over expenses are the only changes. Balances required to be displayed on the face of the statement are the change in net assets as the origination point; subtotals of cash flows from operating, investing, and financing activities; the total cash flows of the period; and cash balances at the beginning and end of the period.

Exhibit 3: Current format of Sample Hospital A statement of revenue
and expenses for the year ended December 31, 1994.(*)