By Matthew O. McDonald, CPA/CFF, CFE | Business Assurance & Advisory Services Partner | Not-for-Profit Industry Team
The Financial Accounting Standards Board and other authoritative bodies have been busy over the last year. While the majority of topics are seen as impacting profit motivated entities, these standards also have an impact on the accounting by exempt organizations.
We are sharing a quick review of these standards that we hope will help you in assessing whether your organization might need to address any of these issues.
Discontinued Operations (FASB ASU 2014-8)
In general terms, this standard works to reduce the number of discontinued operations reported and require additional financial statement disclosure for discontinued operations. A not-for-profit would generally report a discontinued operation should the organization have a disposal of an activity that would be a strategic shift that has, or will have, a major effect on the organizations financial results or operations, and the component is held for sale, or disposed of by sale or by other means.
Revenue from Contracts with Customers (FASB ASU 2014-9)
While this standard did not impact the accounting for contributions by not-for-profit organizations, this standard could have an impact on the reporting of exchange transactions. Specifically, the accounting standards require that exchange transactions be reported under the guidance of revenue from contracts with customers. As a reminder, the update requires organizations to take a five step approach to identify performance obligations and how to recognize revenue when those performance obligations are met.
Extraordinary and Unusual Items (FASB ASU 2015-1)
Sorry to be the bearer of bad news, however, this update removes these concepts from generally accepted accounting principles.
Going Concern (FASB ASU 2014-15)
The concept of going concern is not new for those preparing financial statements for organizations. Going concern and its applicable guidance has, up to this issuance, been a concept embedded in the auditing standards, not accounting standards. But with this standard, the concept now becomes part of the accounting guidance, making the going concern assertion an assertion being made by management. Further, it tweaks the concept that an organization has the ability to continue operations from one year from the date of the statements (year-end) to one year from the date the financial statements are issued (date of the audit opinion).
Financial Statements for Not-for-Profits
This standard has not been issued (yet), however, current guidance from FASB is that an exposure draft on this topic may come as early as the second quarter of 2015. Please watch future blogs for developments in this area.
Standards for Internal Control in the Federal Government (the “Green Book”)
Not-for-profits have the option to follow this guidance related to the standards as a framework for internal control. If your organization follows this guidance, please be aware of the update issued in September 2014.
Should you have any questions on any of these topics, please contact your Keiter professional or one of Keiter’s not-for-profit team members for further assistance. Email | 804.747.0000
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.