Not-for-Profit Advisory Committee Meeting Recap
March 4-5, 2019
The FASB Not-for-Profit Advisory Committee (the Committee) held its regular semiannual meeting on March 4 and 5, 2019. Topics discussed included:
Accounting Standards Update No. 2018-08, Not-for-Profit
Entities (Topic 958): Clarifying the Scope and the Accounting Guidance
for Contributions Received and Contributions Made—The Committee
discussed the two main implementation issues that have been raised to
the FASB staff since the issuance of the final Update in June of 2018:
Issue 1: How to account for cost-sharing provisions when applying ASU 2018-08 and when to recognize revenue
The Committee concluded that significant judgment exists in analyzing
both cost-sharing provisions and budget requirements within the context
of the indicators provided in the standard. The Committee recommended to
the Board that the staff issue implementation guidance, such as a FASB
Issue 2: Whether and how to apply the limited discretion indicator to
various requirements, especially to provisions about budgets
Implementation Issues—The Committee discussed implementation issues relating to ASUs:
No major new issues were discussed. The Topic 606 discussion
included an update from a Committee member on the activities of the
Healthcare Financial Management Association (HFMA) to provide
supplemental revenue recognition guidance for the healthcare sector.
- No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities
- No. 2014-09, Revenue from Contracts with Customers (Topic 606), and follow-up ASUs
- No. 2016-02, Leases (Topic 842), and follow-up ASUs
- No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and follow-up ASUs, and
- No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.
Updating the Definition of Collections—FASB staff provided an update on the Board’s redeliberation decisions on the proposed ASU, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections.
The staff summarized the external review comments received on a draft
of the final Update and described a final sweep issue to be brought to
the Board on March 6, 2019.
Extending Private Company Alternatives on Certain Identifiable Intangible Assets and Goodwill to Not-for-Profit Entities—FASB staff provided an update on the proposed ASU, Intangibles—Goodwill
and Other (Topic 350), Business Combinations (Topic 805), and
Not-for-Profit Entities (Topic 958): Extending the Private Company
Accounting Alternatives on Goodwill and Certain Identifiable Intangible
Assets to Not-for-Profit Entities, and discussed the overall positive feedback received from comment letter respondents.
Updates on Other Recently Issued/Soon-to-Be Issued ASUs and Other
Projects in Process—FASB staff provided updates on recent ASUs and
ongoing projects, including Identifiable Intangible Assets and Subsequent Accounting for Goodwill, Reference Rate Reform: Facilitation of the Effects of the Interbank Offered Rate Transition on Financial Reporting, Balance Sheet Classification of Debt, Financial Performance Reporting, and the Disclosure Framework Initiative,
and a participating observer provided updates on the AICPA’s projects
on management discussion and analysis (MD&A) and cryptocurrency.
The Committee discussed how the FASB is monitoring reference rate
reform, with the aim of ultimately limiting the accounting impact to
instances in which there are changes in existing debt, hedging, and
other agreements that go beyond mere substitution of economically
equivalent rates and spreads. The Committee discussed the Board’s
alternatives related to the contractual linkage of debt agreements and
financing arrangements for Balance Sheet Classification of Debt.
Committee members generally expressed a preference for linking the
arrangements if specific criteria are met, indicating that the linkage
is more relevant to financial statement users because it better reflects
the underlying economics of the redeemable debt arrangement.
Other—Other topics discussed included:
- International NFP activities
- Recent trends, concerns, and observations in the NFP sector.