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Statement of Functional Expenses for Nonprofits: Categorizing and Reporting Expenses Under ASU 2016-14

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, August 20, 2020

Recorded event now available

or call 1-800-926-7926

This course will provide nonprofit finance professionals and their advisers with a review of current trends related to statements of functional expenses (SFEs) and best practices for creating an accurate account of functional expenses.


Donors, government regulators, watchdog agencies, and other parties pay close attention to the cost ratios and expense trends unveiled in a nonprofit's SFE. The preparation of an accurate SFE under the applicable standards is vital for nonprofits and advisers.

A well designed SFE demonstrates the effectiveness of a nonprofit's controls over its administration and fundraising costs. It divides total expenses into the program, management and general catagories, fundraising categories, and also into functional and natural categories. The statement must meet the terms of FASB (ASU) 2016-14.

Correctly preparing an SFE is quite challenging, especially when it comes to determining functional classifications and appropriate allocation methods. At the same time, conclusions drawn by readers of this statement can impact charitable solicitations for better or worse.

Listen as our panel of experienced advisors explains the critical data, rules, and best practices for correctly preparing an SFE for a nonprofit organization.



  1. Standards governing the preparation of an SFE
    1. FASB ASU 2016-14
    2. GAAP
    3. Other standards
  2. Categorization of a nonprofit's expenses
    1. Determining functional categories
    2. Program expenses
    3. Management and general expenses
    4. Fundraising expenses
  3. Best practices with SFEs
  4. How outside parties use SFEs
    1. What is the IRS watching
    2. What donors are watching
  5. Common errors in functional reporting


The panel will cover topics like these and other vital issues:

  • Categorizing a nonprofit's expenses
  • Avoiding common errors in functional reporting
  • Making defensible decisions on allocating joint costs
  • Analyzing what the SFE says about the nonprofit's expense efficiency
  • Understanding accounting standards that govern the preparation of an SFE


Buchholz, Alexander
Alexander K. Buchholz, CPA, MBA, CGMA

PKF O’Connor Davies

Mr. Buchholz has more than 15 years of experience in public accounting, including with a “Big Four”...  |  Read More

Hill, Alyssa
Alyssa Hill, CPA

Carr Riggs & Ingram

Ms. Hill has more than 20 years of public accounting experience with an emphasis in nonprofit and governmental...  |  Read More

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