If a private not-for-profit fails to comply with donor restriction on contributions received,the organization must accrue and disclose a contingent liability following FASB Statement No.5.

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FASB Statement No.5 requires that contingencies be accrued and disclosed in the financial statements of a private not-for-profit organization if it fails to comply with donor restrictions on contributions received. This is done to ensure that users of the financial statements are informed about the potential impact of the contingency on the organization's financial position and results of operations.

If a Private Not-For-Profit Fails to Comply with Donor Restriction