By: Rich Banner, CPA, Partner

On August 3rd, the Financial Accounting Standards Board (FASB) exposed for comment a proposed Accounting Standards Update (ASU) related to accounting for contributions received and made.  The comment period will end on November 1, 2017.

The impetus for the FASB to issue the proposed ASU was a diversity in practice amongst not-for-profit organizations. The proposed ASU seeks to provide a better way for not-for-profits to evaluate whether grants should be treated as exchange transactions or contributions.  This improved method would utilize clarifying guidance to assist the grant recipient in determining if the provider is receiving value in return.    Also, the FASB is seeking to improve guidance to assist not-for-profits in determining if contributions are conditional or unconditional and whether there are donor-imposed restrictions.  It was noted by the FASB that the guidance would apply to both recipients and providers of contributions.

The implementation dates for this proposed ASU follow those of the revenue recognition standard:

    • Annual reporting periods beginning after December 15, 2017, including interim periods within that annual period, for not-for-profits that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market.
    • Annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

Early implementation of the proposed standard would be permitted whether the revenue recognition standard is adopted early.

Tate & Tryon will continue to monitor developments surrounding this proposed change in accounting standards and will be discussing it in future articles over the coming months.  For those interested in reading the full text of the proposed ASU or commenting on it, the proposed ASU is available through www.fasb.org.

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