April 7, 2020
The FASB Not-for-Profit Advisory Committee (the Committee) held its regular semiannual meeting on Aril 7, 2020. The meeting was abbreviated and held via video conference because of the COVID-19 pandemic. Topics discussed included:
Reporting of Contributed Nonfinancial Assets (Gifts-in-Kind) by Not-for-Profit Entities (NFPs)—Committee members discussed the FASB project on the reporting of gifts-in-kind by NFPs, focusing on the amendments in the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets, and the potential need to extend the comment period beyond the current deadline of April 10, 2020.
Committee members generally indicated that the proposed presentation and disclosure requirements were operable and would provide additional transparency around the reporting of contributed nonfinancial assets that would enhance financial reporting. Committee members also noted that the flexibility the proposed Update affords when applying the presentation and disclosure requirements would enable NFPs to provide information that is most relevant to each NFP’s stakeholders. Some Committee members and participating observers noted that valuation challenges will still exist, especially for pharmaceuticals and certain other assets, but providing additional examples either in the Codification or in educational materials such as a Staff Q&A document, in addition to the proposed Update, could be helpful.
Committee members also noted that additional, more detailed feedback will be provided in the comment letters and that it is not necessary to extend the comment letter deadline.
Implementation of Major/Other Updates—Accounting Standards Updates No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates; No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting; No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, and Topic 842, Leases.
A Committee member from the higher education industry presented a request from the National Association of College and University Business Officers to extend the effective date for Topic 842 by one year for NFPs with public debt, citing the inability of many organizations, especially those with imminent year-ends (May or June), to focus the necessary resources and attention on completing the implementation related to the COVID-19 pandemic. Other Committee members, especially from the health care industry, indicated their support for similar reasons. Deferral of the effective date for Topic 842 was subsequently discussed at the FASB meeting on April 8, 2020.
Other Projects in Progress—FASB staff provided an update on the Identifiable Intangible Assets and Subsequent Accounting for Goodwill project.
Recent Trends, Concerns, and Observations of Not-for-Profit Advisory Committee Members—The Committee also discussed recent trends, concerns, and observations in the NFP sector, with a focus on the potential reporting implications for NFPs related to the COVID-19 pandemic. Noteworthy items included changes to grant agreements to increase flexibility in their use by recipients, accounting for forgivable loans provided by the CARES Act Paycheck Protection Program and for-profit entities possibly analogizing to the grants and contributions guidance provided by Update 2018-08, presentation of COVID-19 response costs with respect to operating measures, and additional potential disclosures that may be needed for subsequent events, going concern considerations, and other matters. Participants indicated that they believe existing guidance is sufficient in these areas and they were unaware, at present, of any COVID-19 related accounting issues requiring standard setting.