Nonprofit Accounting Insights: FASB Advisory Council Meeting Takeaways

By Colin M. Hannifin, CPA, Business Assurance & Advisory Services Senior Manager

Nonprofit Accounting Insights: FASB Advisory Council Meeting Takeaways

Changes coming to US accounting standards?

The Financial Accounting Standards Board (“FASB”) has a significant purview, overseeing the establishment of financial accounting and reporting standards for public and private companies and not-for-profit organizations.

One of the ways the FASB ensures that it considers the needs of its multiple stakeholders is through the use of advisory groups, which are permanent resources that advise and provide feedback to the FASB on various topics. Two of these advisory bodies – the Not-for-Profit Advisory Council and the Private Company Council – held meetings recently with results that may portend future changes to US accounting standards.

The Not-for-Profit Advisory Council

The Not-for-Profit Advisory Council (“NAC”) was established in October 2009 and serves as an advisory body for the FASB on matters related to nonprofit financial accounting and reporting. The NAC provides input and feedback on proposed and issued standards, as well as facilitating input from the larger nonprofit sector as it relates to standards, FASB projects, and other issues.

The NAC meets twice annually, and its recent meeting was held on March 26, 2024. One of the topics of conversation surrounded whether there are sufficient disclosures regarding the risk of previously received pledges being withdrawn, especially in the face of unexpected or global events. The Accounting Standard Codification (“ASC”) already includes provisions for recognizing – and derecognizing – contributions and pledges and related valuation allowances. However, as one Council member pointed out, these may not adequately highlight the risk to the readers of the financial statements.

When trying to imagine situations that may lead to insufficient reporting, readers only have to remember the uncertainty in the early days of the COVID-19 pandemic. Many nonprofit organizations had contributions and pledges canceled or amended after recognition as donors grappled with the effects of lockdowns and business slow-downs.

No decision was made on this subject at this time, but these discussions provide a window into the mindset of the Council and, potentially, future amendments to the ASC and required reporting.

Other topics of conversation included a discussion around the challenges in implementing ASC Topic 326, Financial Instruments – Credit Losses, which is effective for fiscal years beginning after December 15, 2022. In particular, they discussed the challenges in applying the standard to trade accounts receivable and other short-term financial assets. This preceded similar sentiments shared by the Private Company Council.

The Private Company Council

The Private Company Council (“PCC”) was established in May 2012 for the purpose of improving the standard setting process for private companies. The PCC works with the FASB to determine whether exceptions or modifications of the ASC are necessary to address the needs of readers of private company financial statements.

The PCC met on April 18, 2024, and identified seven areas for potential improvement to US generally accepted accounting principles (“GAAP”). One such area is the application of ASC Topic 326, which requires implementation of the new Current Expected Credit Loss (“CECL”) methodology for estimating credit losses on all financial instruments. Members of the PCC expressed that work to implement the new standard to short-term financial instruments, including trade receivables, was requiring significant resources without significant impact.

Other topics and potential improvements that the PCC has identified include the following:

  • Reducing complexity related to debt modifications and extinguishments.
  • Simplifying or providing alternatives to ASC Topic 842.
  • Applying ASC Topic 606, Revenue from Contracts with Customers to short-cycle manufacturing and presentation of conditional retainage and overbillings as contract assets and liabilities.
  • Employee Stock Ownership Plans.
  • Expense disaggregation.
  • Fair value disclosures of held-to-maturity debt securities.

Aside from narrowing and refining the scope of projects the PCC will be focusing on, there were no decisions made at this time.


Even when meetings of the advisory councils do not result in immediate action, the minutes and nature of their meetings can be insightful when trying to anticipate future topics of amendments and what those amendments may include. We will continue monitoring the advisory committees, and the FASB itself, and keep you informed of proposals as they work their way through the standard-setting process.

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About the Author

Colin M. Hannifin

Colin M. Hannifin, CPA, Business Assurance & Advisory Services Senior Manager

Colin is a Business Assurance & Advisory Services Senior Manager at Keiter. He has significant experience in public accounting for both the not-for-profit and private sectors. Colin’s clients rely on him for sound advice and insights on accounting regulations and changes that may impact their business.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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