FSO Calculation

To prepare a CCRC’s financial statements in accordance with generally accepted accounting principles (GAAP), auditors rely on the future service obligation report. The CCRC’s obligation to provide future services is derived using a method prescribed by accounting guidelines from Chapter 14 of the AICPA Audit and Accounting Guide for Health Care Organizations and reflects the amortization of entry fees. Although the future service obligation report is essential for completing a CCRC’s annual audit and employs some actuarial principles, it is not a substitute for, nor does it provide the same information as, a comprehensive actuarial study.