FASB Accounting Standards Update: Consolidation Guidance for Not-for-Profits

By Doug K. Nickerson, CPA, CGFM, CFE, CIA | Partner | Not-for-Profit Team

In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-02, Not-for-Profit Entities – Consolidation (Subtopic 958-810). This new standard addresses consolidation guidance to clarify when a not-for-profit entity (NFP) that is a general partner or a limited partner should consolidate a for-profit limited partnership or similar entity once the amendments of ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, become effective. Under current guidance, a NFP that is a general partner or limited partner of a for-profit limited partnership or similar entity is required to apply the consolidation guidance in Subtopic 810-20, unless the partnership is reported at fair value.  Under the amendments in ASU 2015-02, Subtopic 810-20 will no longer exist and therefore create some uncertainty and complexity in determining whether a NFP general partner or limited partner should consolidate a for-profit limited partnership. ASU 2017-02 retains the consolidation guidance that currently exists (pre-adoption of ASU 2015-02) in Subtopic 810-20 by including it in Subtopic 958-810, specific to not-for-profit entities. The amendments in this ASU are effective for not-for-profit entities for fiscal years beginning after December 15, 2016.  Early adoption is permitted. Read the full guidance here. Questions on how this new standard may affect your not-for-profit organization? Contact us. We can help.  Not-for-Profit Team | 804.747.0000 | Email